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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
Schedule TO
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
Of the Securities Exchange Act of 1934
____________________________
Rare Medium Group, Inc.
(Name of Subject Company (Issuer) and Filing Person (Offeror))
____________________________
Common Stock, par value $0.01 per share
(Titles of Class of Securities)
____________________________
75382N109
(CUSIP Number of Class of Securities)
____________________________
Robert C. Lewis, Esq.
Senior Vice President, General Counsel and Secretary
Rare Medium Group, Inc.
19 West 44th Street, Suite 507
New York, New York 10036
(212) 730-7540
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and
Communications on Behalf of the Filing Persons)
____________________________
Copy To:
Gregory A. Fernicola, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000
CALCULATION OF FILING FEE
=======================================|========================================
Transaction Valuation* | Amount of Filing Fee**
---------------------------------------|----------------------------------------
$2,500,000 | $203.00
=======================================|========================================
* Estimated for purposes of calculating the filing fee only. This calculation
assumes the purchase of 2,500,000 shares of common stock of Rare Medium
Group, Inc. at the tender offer price of $1.00 per share of common stock.
** The amount of the filing fee, calculated in accordance with the Securities
Exchange Act of 1934, equals 0.0000809 of the transaction valuation.
|_|Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not Applicable Filing Party: Not Applicable
Form or Registration No.: Not ApplicableDate Filed: Not Applicable
|_|Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
|_| third-party tender offer subject to Rule 14d-1.
|x| issuer tender offer subject to Rule 13e-4.
|_| going-private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: |_|
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This Tender Offer Statement on Schedule TO relates to the offer by
Rare Medium Group, Inc., a Delaware corporation ("Rare Medium" or the
"Company"), to purchase shares of its voting common stock, $0.01 par value per
share (the "Common Stock"). Rare Medium is offering to purchase up to
2,500,000 shares at a price of $1.00 per share, net to the seller in cash,
without interest. Rare Medium's offer is being made upon the terms and subject
to the conditions set forth in the Offer to Purchase dated March 13, 2003
("Offer to Purchase") and in the related Letter of Transmittal ("Letter of
Transmittal") which, as amended or supplemented from time to time, together
constitute the offer. This Tender Offer Statement on Schedule TO is intended
to satisfy the reporting requirements of Section 13(e) of the Securities
Exchange Act of 1934.
All information in the Offer to Purchase and the related Letter of
Transmittal is hereby expressly incorporated by reference in answer to all
items in this Schedule TO, except as otherwise set forth below.
ITEM 1. Summary Term Sheet.
The information set forth in the "Summary Term Sheet" of the Offer
to Purchase is incorporated herein by reference.
ITEM 2. Subject Company Information.
(a) The name of the subject company is Rare Medium Group, Inc., a
Delaware corporation. The address of the Company's principal executive offices
is 19 West 44th Street, Suite 507, New York, New York 10036. The Company's
telephone number is (212) 730-7540.
(b) This Schedule TO relates to the Company's voting common stock,
par value $0.01 per share, of which there were 7,039,758 shares issued and
outstanding as of February 28, 2003. The information set forth in the section
of the Offer to Purchase titled "Introduction" is incorporated herein by
reference.
(c) The information set forth in the section of the Offer to
Purchase titled "Price Range of Shares" is incorporated herein by reference.
ITEM 3. Identity and Background of Filing Person.
Rare Medium is the filing person and subject company. The business
address and telephone number of Rare Medium are set forth under Item 2(a) of
this Schedule TO.
Pursuant to General Instruction C to Schedule TO, the following
persons are the directors and/or executive officers of Rare Medium:
Glenn S. Meyers Chairman and Chief Executive Officer
Jeffrey A. Leddy President and Chief Operating Officer
Robert C. Lewis Senior Vice President, General Counsel and Secretary
Craig C. Chesser Senior Vice President Finance and Treasurer
Michael A. Hultberg Senior Vice President and Controller
Jeffrey M. Killeen Director
William F. Stasior Director
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Andrew D. Africk Director
Marc J. Rowan Director
Michael S. Gross Director
The business address and telephone number for all of the above
directors and executive officers are c/o Rare Medium Group, Inc., 19 West 44th
Street, Suite 507, New York, New York 10036 and (212) 730-7540.
The following persons may be deemed to be affiliates of Rare
Medium:
Apollo Investment
Fund IV, L.P.
Apollo Overseas
Partners IV, L.P.
AIF/RRRR LLC
AP/RM Acquisition, LLC
The business address and telephone number for Apollo Investment
Fund IV, L.P., Apollo Overseas Partners IV, L.P., AIF/RRRR LLC and AP/RM
Acquisition, LLC (collectively, the "Apollo Stockholders") are Two
Manhattanville Road, Purchase, New York 10577 and (914) 694-8000.
Messrs. Africk, Rowan and Gross, directors of the Company, are
principals of Apollo Advisors IV, L.P, which together with an affiliated
investment manager, serves as the manager of each of the Apollo Stockholders.
Messrs. Africk, Rowan and Gross disclaim beneficial ownership of shares held
by the Apollo Stockholders.
ITEM 4. Terms of the Transaction.
(a) The information set forth in the sections of the Offer to
Purchase titled "Summary Term Sheet," "Introduction," "Number of Shares;
Purchase Price Proration," "Procedures for Tendering Shares," "Withdrawal
Rights," "Purchase of Shares and Payment of Purchase Price," "Conditional
Tender of Shares," "Conditions of the Offer," "Extension of the Offer;
Termination; Amendment" and "Certain U.S. Federal Income Tax Consequences" is
incorporated herein by reference.
(b) Rare Medium has been advised that none of its directors,
executive officers or affiliates intend to tender their shares of Common Stock
in the offer.
ITEM 5. Past Contacts, Transactions, Negotiations and Agreements.
The description of the original investment in Rare Medium by the
Apollo Stockholders contained in Rare Medium's Definitive Proxy Statement for
the Annual Meeting of Stockholders held on August 19, 1999 (the "1999 Proxy
Statement") is incorporated herein by reference. Such description is qualified
in its entirety by the text of the Amended and Restated Securities Purchase
Agreement among Rare Medium and the Apollo Stockholders, dated as of June 4,
1999 (the "1999 Securities Purchase Agreement"), the terms of Rare Medium's
Series A Preferred Stock contained in Rare Medium's Restated Certificate of
Incorporation, as amended (the "Certificate of Incorporation") and the text of
the Series 1-A Warrants and Series 2-A Warrants (collectively, the "Warrants")
purchased by the Apollo Stockholders. The 1999 Proxy Statement, the 1999
Securities Purchase Agreement, the Certificate of Incorporation and the Series
1-A and 2-A Warrants are filed as Exhibits (d)(1), (d)(2), (d)(3), (d)(4),
(d)(5) and (d)(6) hereto, respectively.
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The description of a subsequent investment in Rare Medium by the
Apollo Stockholders, the description of various modifications of the terms of
the original investment and the description of related agreements contained in
Item 3 of Rare Medium's Solicitation/Recommendation Statement on Schedule
14D-9 filed with the Securities and Exchange Commission ("SEC") on April 9,
2002 (the "Schedule 14D-9") are incorporated herein by reference. Such
descriptions are qualified in their entirety by the text of the Investment
Agreement among Rare Medium and the Apollo Stockholders, dated April 2, 2002
(the "2002 Investment Agreement") and the Stipulation of Settlement in the
matter of In Re Rare Medium Group, Inc. Shareholders Litigation, Consolidated
C.A. No. 18879 NC (the "Stipulation of Settlement"). The Schedule 14D-9, the
2002 Investment Agreement and Stipulation of Settlement are filed as Exhibits
(d)(7), (d)(8) and (d)(9) hereto, respectively.
The Stipulation of Settlement was approved by the Delaware Court of
Chancery on December 2, 2002. In connection with the settlement agreement, the
Company effectuated a one for ten reverse stock split and completed a rights
offering in July 2002, and the Apollo Stockholders completed a limited tender
offer in May 2002, among other things.
With court approval of the settlement agreement, Warrants held by
the Apollo Stockholders to purchase 275,245 shares of Common Stock have been
cancelled, and the dividends on the Series A Preferred Stock will continue to
be paid in the form of additional shares of preferred stock in lieu of cash
through September 30, 2004. Such dividends would have otherwise become payable
in cash at the option of the Apollo Stockholders beginning with the quarter
ended September 30, 2002.
The description of the Company's stock plans, equity plan for
directors, and the stock options held by, and other agreements with, the
Company's directors and officers contained in the Company's Definitive Proxy
Statement for the Annual Meeting of Stockholders held on December 17, 2002, is
incorporated herein by reference.
On October 15, 2002, the Compensation Committee of the Board of
Directors of the Company (the "Committee") approved certain option issuances
for executive officers and directors of the Company. Mr. Leddy, the Company's
President and Chief Operating Officer, was granted an option to purchase
75,000 shares of Common Stock, at an exercise price of $0.85 per share, the
fair market value on the date of grant, vesting ratably annually over three
years, subject to acceleration if Mr. Leddy's employment should be terminated
by the Company other than for "Cause", as that term is defined in his
employment agreement with the Company. In addition, each of the Company's
non-employee directors was granted an option to purchase 35,000 shares of
Common Stock, at an exercise price of $0.85 per share, the fair market value
on the date of grant vesting annually in thirds on the anniversary of such
director's service with the Company if the director was fully vested in
previously granted options and otherwise vesting annually in thirds on the
anniversary of the date of grant. The Committee also granted each of Messrs.
Chesser, Hultberg and Lewis, an option to purchase an additional 20,000 shares
of Common Stock, at an exercise price of $0.85 per share, the fair market
value on the date of grant, vesting ratably annually over three years, subject
to acceleration if the particular officer should be terminated by the Company
other than for "Cause", as that term is defined in their respective employment
agreements with the Company. Finally, the Committee approved a grant to Mr.
Meyers, the Company's Chairman and Chief Executive Officer, of an option to
purchase 155,000 shares of Common Stock, at an exercise price of $0.85 per
share, the fair market value on the date of grant, vesting ratably annually
over three years, subject to acceleration if he ceased to be an employee of
the Company, other than for "Cause", as such term is defined in his employment
agreement. In addition, the exercise price of Mr. Meyers remaining option was
reduced to the
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fair market value of the Common Stock at the close of business
on the date of the Committee's action.
ITEM 6. Purposes of the Transaction and Plans or Proposals.
The information set forth in the "Summary Term Sheet - What is the
purpose of the offer?" and in the section of the Offer to Purchase titled
"Purpose of the Offer; Certain Effects of the Offer" is incorporated herein by
reference.
ITEM 7. Source and Amount of Funds or Other Consideration.
The information set forth in the section of the Offer to Purchase
titled "Source and Amount of Funds" is incorporated herein by reference.
ITEM 8. Interest in Securities of the Subject Company.
The information set forth in the section of the Offer to Purchase
titled "Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares" is incorporated herein by reference.
Except as described above, to best of knowledge of the Company, no
other persons specified in Instruction 1 to Item 1008(b) of Regulation M-A
affected any transaction in the Common Stock during the past 60 days.
ITEM 9. Persons/Assets, Retained, Employed, Compensated or Used.
The information set forth in the sections of the Offer to Purchase
titled "Introduction," "Purpose of the Offer; Certain Effects of the Offer"
and "Fees and Expenses" is incorporated herein by reference.
ITEM 10. Financial Statements.
Not applicable.
ITEM 11. Additional Information.
The information set forth in the sections of the Offer to Purchase
titled "Purpose of the Offer; Certain Effects of the Offer," "Certain
Information Concerning Rare Medium," "Effects of the Offer on the Market for
Shares; Registration Under the Exchange Act" and "Certain Legal Matters;
Regulatory Approvals" is incorporated herein by reference
ITEM 12. Exhibits.
(a)(1)(A) Offer to Purchase dated March 13, 2003.*
(a)(1)(B) Form of Letter of Transmittal.*
(a)(1)(C) Form Notice of Guaranteed Delivery.*
(a)(1)(D) Form of Letter to Brokers, Dealers, Banks, Trust Companies and
Other Nominees.*
(a)(1)(E) Form of Letter to Clients for use by Brokers, Dealers, Banks,
Trust Companies and Other Nominees.*
(a)(1)(F) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.*
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(a)(5)(A) Press Release issued by the Company on March 13, 2003.*
(b) Not applicable.
(d)(1) The Company's Definitive Proxy Statement for the Annual Meeting
of Stockholders held on August 19, 1999, filed with the SEC on
July 12, 1999, is hereby incorporated herein by reference
(SEC File No. 0-13865).
(d)(2) Amended and Restated Securities Purchase Agreement, dated as
of June 4, 1999, among Rare Medium Group, Inc., Apollo
Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P.
and AIF/RRRR LLC, which was filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K filed with the SEC on
June 21, 1999, is hereby incorporated herein by reference.
(d)(3) Restated Certificate of Incorporation of Rare Medium Group,
Inc., which was filed as Exhibit 3.1.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
2002, is hereby incorporated herein by reference.
(d)(4) Certificate of Amendment to the Restated Certificate of
Incorporation of Rare Medium Group, Inc., which was filed as
Exhibit 3.1.2 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002, is hereby
incorporated herein by reference.
(d)(5) Form of Series 1-A Warrant which was filed as Appendix C to
the Company's Definitive Proxy Statement for the Annual
Meeting of Stockholders held on August 19, 1999, filed with
the SEC on July 12, 1999, is hereby incorporated herein by
reference.
(d)(6) Form of Series 2-A Warrant which was filed as Appendix D to
the Company's Definitive Proxy Statement for the Annual
Meeting of Stockholders held on August 19, 1999, filed with
the SEC on July 12, 1999, is hereby incorporated herein by
reference.
(d)(7) The Company's Solicitation/Recommendation Statement on
Schedule 14D-9 which was filed with the SEC on April 9, 2002,
is hereby incorporated herein by reference (SEC File No.
0-13865).
(d)(8) Investment Agreement among Rare Medium and the signatories
thereto, dated as of April 2, 2002 which was filed as Exhibit
99.2 to the Company's Current Report on Form 8-K, filed with
the SEC on April 4, 2002, is hereby incorporated herein by
reference.
(d)(9) Stipulation of Settlement in the matter of In Re Rare Medium
Group, Inc. Shareholders Litigation, Consolidated C.A. No.
18879 NC which was filed as Exhibit 99.3 to the Company's
Current Report on Form 8-K, filed with the SEC on April 4,
2002, is hereby incorporated herein by reference.
(g) Not applicable.
(h) Not applicable.
_________________
* Filed herewith.
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SIGNATURES
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
RARE MEDIUM GROUP, INC.
By: /s/ Robert C. Lewis
--------------------------------
Name: Robert C. Lewis
Title: Senior Vice President,
General Counsel and Secretary
Date: March 13, 2003
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INDEX TO EXHIBITS
Exhibit
Number Document
(a)(1)(A) Offer to Purchase dated March 13, 2003.*
(a)(1)(B) Form of Letter of Transmittal.*
(a)(1)(C) Form of Notice of Guaranteed Delivery.*
(a)(1)(D) Form of Letter to Brokers, Dealers, Banks, Trust Companies and
Other Nominees.*
(a)(1)(E) Form of Letter to Clients for use by Brokers, Dealers, Banks,
Trust Companies and Other Nominees.*
(a)(1)(F) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form
W-9.*
(a)(5)(A) Press Release issued by the Company on March 13, 2003.*
(b) Not applicable.
(d)(1) The Company's Definitive Proxy Statement for the Annual Meeting
of Stockholders held on August 19, 1999, filed with the SEC on
July 12, 1999, is hereby incorporated herein by reference (SEC
File No. 0-13865).
(d)(2) Amended and Restated Securities Purchase Agreement, dated as of
June 4, 1999, among Rare Medium Group, Inc., Apollo Investment
Fund IV, L.P., Apollo Overseas Partners IV, L.P. and AIF/RRRR
LLC, which was filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K filed with the SEC on June 21, 1999, is
hereby incorporated herein by reference.
(d)(3) Restated Certificate of Incorporation of Rare Medium Group,
Inc., which was filed as Exhibit 3.1.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2002,
is hereby incorporated herein by reference.
(d)(4) Certificate of Amendment to the Restated Certificate of
Incorporation of Rare Medium Group, Inc., which was filed as
Exhibit 3.1.2 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2002, is hereby incorporated
herein by reference.
(d)(5) Form of Series 1-A Warrant which was filed as Appendix C to the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders held on August 19, 1999, filed with the SEC on July
12, 1999, is hereby incorporated herein by reference.
(d)(6) Form of Series 2-A Warrant which was filed as Appendix D to the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders held on August 19, 1999, filed with the SEC on July
12, 1999, is hereby incorporated herein by reference.
(d)(7) The Company's Solicitation/Recommendation Statement on Schedule
14D-9 which was filed with the SEC on April 9, 2002, is hereby
incorporated herein by reference (SEC File No. 0-13865).
(d)(8) Investment Agreement among Rare Medium and the signatories
thereto, dated as of April 2, 2002 which was filed as Exhibit
99.2 to the Company's Current Report on Form 8-K, filed with the
SEC on April 4, 2002, is hereby incorporated herein by
reference.
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(d)(9) Stipulation of Settlement in the matter of In Re Rare Medium
Group, Inc. Shareholders Litigation, Consolidated C.A. No. 18879
NC which was filed as Exhibit 99.3 to the Company's Current
Report on Form 8-K, filed with the SEC on April 4, 2002, is
hereby incorporated herein by reference.
(g) Not applicable.
(h) Not applicable.
_________________
* Filed herewith.
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