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Technology Stocks : RRRR: Rare Medium Group (soon to be) formerly ICC -- Ignore unavailable to you. Want to Upgrade?

To: Mad2 who wrote (711)	5/17/1999 7:37:00 PM
From: Rajiv	Read Replies (1) \| Respond to of 1150

From the 10-Q On May 7, 1999, we entered into definitive agreements with Apollo Investment Fund IV, L.P., pursuant to which we have agreed to sell 150,000 shares of Series A Convertible Preferred Stock for $15 million and 720,000 shares of Series B Preferred Stock for $72 million to Apollo Investment Fund IV, L.P. and several other purchasers. We anticipate that closing will occur on or before May 31, 1999. The Series A Convertible Preferred Stock acquired at closing will have full voting rights together with the common stockholders equal to approximately 17% of our outstanding common stock. The Series B Preferred Stock will have no voting rights, subject to our obtaining stockholder approval of the conversion of the Series B Preferred Stock into Series A Convertible Preferred Stock within a certain period, as discussed below. In order to comply with the Nasdaq National Market listing requirements, which in certain cases require stockholder approval of issuances of common stock or securities convertible into or exercisable for common stock in an amount equal to 20% or more of the common stock or voting power of an issuer outstanding before the issuance, the agreements with the purchasers require us to obtain stockholder approval of the conversion of the non-voting Series B Preferred Stock into Series A Convertible Preferred Stock. Upon such conversion, the aggregate Series A Convertible Preferred Stock outstanding will have full voting rights together with the common stockholders equal to approximately 43% of our outstanding common stock. The $72 million received as consideration for the Series B Preferred Stock will be held in escrow following closing pending receipt of stockholder approval of the conversion of the Series B Preferred Stock into Series A Convertible Preferred Stock. Upon obtaining such approval, the Series B Preferred Stock will automatically convert into Series A Convertible Preferred Stock without any further action. If such stockholder approval is not obtained within 120 days after closing, a majority of the holders of the Series B Preferred Stock will have the right to cause us to redeem the Series B Preferred Stock and have the $72 million held in escrow returned to them. In lieu thereof, the holders of Series B Preferred Stock will have other rights. There can be no assurance that the transaction contemplated with Apollo by such definitive agreements will be consummated or, if consummated, that we would obtain such stockholder approval. Each share of Series A Convertible Preferred Stock will be convertible into a number of shares of common stock determined by dividing the liquidation preference of $100 per share, plus accrued and unpaid dividends, by the conversion price of $7.00. Each share of Series A Convertible Preferred Stock and Series B Preferred Stock will be entitled to preferred dividends, a liquidation preference, and will be issued with detachable warrants to purchase 13.5 shares of common stock at a variable strike price based on the then current market price of the common stock. At closing, the purchasers will also be issued warrants to purchase an aggregate of approximately 12 million shares of common stock at a strike price of $7.00 per share. For as long as Apollo Investment Fund IV, L.P. owns at least 25% of the securities acquired at closing, the holders of the Series A Convertible Preferred Stock, voting as a separate class, will have the right to elect three of the members of our Board of Directors and maintain at least 40% representation on the Board if the Board size is increased. In addition, such holders will have the right to elect a majority of the Board at any time upon the occurrence of certain events of non-compliance.