Edgar Filing: RARE MEDIUM GROUP INC

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

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RARE MEDIUM GROUP, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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RARE MEDIUM GROUP, INC.

44 W. 18th STREET, 6th FLOOR

NEW YORK, NEW YORK 10011

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held March 28, 2002

To the holders of common stock and series A convertible preferred
stock of Rare Medium Group, Inc., a Delaware corporation:

Please take notice that our annual meeting of stockholders for the
year ended December 31, 2000 of Rare Medium will be held in the Greenville
Room at Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801,
on March 28, 2002, at 8:00 a.m., local time, for the following purposes,
all as more fully described in the attached proxy statement:

1. To elect two (2) class 2 directors, one to be elected by the
preferred stockholders pursuant to the terms of our Restated Certificate of
Incorporation governing series A preferred stock and one to be elected by
the common stockholders and the preferred stockholders voting together as a
single class;

2. To ratify the appointment of KPMG LLP as the independent
auditors of the Company for the year ending December 31, 2001; and

3. 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 our annual meeting. The board of directors has fixed the
close of business on January 31, 2002 as 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 January 31, 2002 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
Robert C. Lewis
Senior Vice President, General Counsel
and Secretary

New York, New York
February 25, 2002

Important

Please complete, sign, date and promptly mail your proxy card.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING................................2

PROPOSAL 1 Election Of Directors.............................................5

PROPOSAL 2 Ratify The Appointment Of KPMG LLP As The Independent
Auditors Of The Company For The Year Ended December 31, 2001.....11

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...............12

EXECUTIVE COMPENSATION.......................................................15

FORWARD LOOKING STATEMENTS...................................................28

OTHER BUSINESS...............................................................28

STOCKHOLDER PROPOSALS........................................................28

ADDITIONAL INFORMATION.......................................................28

ANNUAL REPORT ON FORM 10-K/A.................................................28

ANNEX A - Amended and Restated Charter of the Audit Committee of the
Board of Directors................................................A-1

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

When And Where Is The Annual Meeting?

The annual meeting will be held on March 28, 2002, beginning at
8:00 a.m., local time, in the Greenville Room at Hotel du Pont, 11th and
Market Streets, Wilmington, Delaware 19810.

What Is The Purpose Of The Annual Meeting?

At the annual meeting, we will ask you to consider and approve the
matters set forth in the accompanying notice of meeting and described in
this proxy statement, including the election of directors and ratification
of our independent public accountants.

Why Did I Receive This Proxy Statement?

We sent you this proxy statement and the enclosed proxy card
because our board of directors is soliciting your proxy to vote at the
annual meeting of stockholders.

This proxy statement summarizes the information you need to know
to vote on an informed basis at the annual meeting; however, you do not
need to attend the annual meeting to vote your shares (see "How do I
vote?"). We began sending this proxy statement, the attached notice of
annual meeting and the enclosed proxy card on or about February 27, 2002,
to all stockholders entitled to vote.

Who Is Entitled To Vote?

If our records show that you are a common stockholder or a
preferred stockholder as of the close of business on January 31, 2002,
which is referred to as the record date, you are entitled to receive notice
of the annual meeting and to vote the shares of common stock or preferred
stock that you held on the record date. The common stockholders and the
preferred stockholders will vote together as a single class on each matter
presented at the annual meeting, except that only the preferred
stockholders will vote on the election of Andrew D. Africk as a class 2
director.

How Many Shares Of Voting Stock Are Outstanding?

On January 31, 2002, there were 65,324,966 shares of our common
stock outstanding and 1,053,259 shares of series A preferred stock
outstanding.

How Many Votes Do The Common Stockholders Have?

Each share of existing common stock that you own entitles you to
one vote for each matter to be voted upon. Accordingly, the holders of
common stock are entitled to an aggregate of 65,324,966 votes.

How Many Votes Do The Preferred Stockholders Have?

The holders of series A preferred stock are entitled to an
aggregate of 9,750,000 votes with respect to the series A preferred stock
or 9.26 votes per share of series A preferred stock.

Can I Attend The Annual Meeting?

If you owned common stock or series A preferred stock on the
record date, you can attend the annual meeting. You should be prepared to
present photo identification for admittance. In addition, if your shares
are held in the name of your broker, bank or other nominee, you must bring
an account statement or letter from the nominee indicating that you are the
beneficial owner of the shares on the record date.

If I Plan To Attend The Annual Meeting, Should I Still Vote By Proxy?

Whether you plan to attend the annual meeting or not, we urge you
to vote by proxy. Returning the proxy card will not affect your right to
attend the annual meeting and vote.

How Do I Vote?

If you hold your shares in our own name as a holder of record, you
may instruct the proxy holders named in the enclosed proxy card how to vote
your shares of common stock or shares of series A preferred stock by
signing, dating and mailing the proxy card in the postage-paid envelope
that has been provided to you by Rare Medium Group.

o If your shares of common stock or shares of series A
preferred stock are held by a broker, bank or other
nominee (i.e., in "street name"), you will receive
instructions from your nominee which you must follow in
order to have your shares of common stock or shares of
series A preferred stock voted.

o If you are a registered stockholder and attend the
annual meeting, you may deliver your completed proxy
card in person. "Street name" stockholders who wish to
vote at the meeting will need to obtain a proxy form
from the broker, bank or other nominee that holds their
shares of common stock or shares of series A preferred
stock of record.

Can I Revoke My Proxy?

Any stockholder who executes and returns a proxy may revoke such
proxy at any time before it is voted at the annual meting by:

(1) filing with the Secretary of Rare Medium Group, at 44 W. 18th
Street, 6th Floor, New York, New York 10011, written notice of revocation
bearing a later date than the proxy; or

(2) filing a duly executed proxy bearing a later date; or

(3) appearing in person and voting by ballot at the annual
meeting.

Any stockholder of record as of the record date attending the
annual meeting may vote in person whether or not a proxy has been
previously given, but the presence (without further action) of a
stockholder at the annual meeting will not constitute revocation of a
previously given proxy.

What Does It Mean If I Get More Than One Proxy Card?

If your shares are registered differently and are in more than one
account, you will receive more than one proxy card. Each proxy card will
indicate the number of shares you are entitled to vote on that particular
card. Sign and return all proxy cards to ensure that all your shares are
voted.

Am I Entitled To Appraisal Rights?

No. You will have no right under Delaware law to seek appraisal of
the value of your Rare Medium Group shares in connection with the matters
being voted upon.

How Does The Board Of Directors Recommend I Vote On The Proposals?

The Board of Directors recommends that you vote in favor of the
election of the director nominees and in favor of ratification of our
independent public accountants.

What Constitutes A Quorum And Why Is It Necessary?

In order to carry on the business of the annual meeting, we must
have a quorum. The holders of a majority of the total number of votes of
our capital stock, present in person or represented by proxy, will
constitute a quorum for the transaction of business at the annual meeting.
Abstentions and broker non-votes, if any, will count for quorum purposes.
If you submit a properly executed proxy card, even if you abstain from
voting, you will be considered part of the quorum.

What Is A Broker Non-Vote?

A broker non-vote occurs with respect to any proposal when a
broker holds your shares in its name and is not permitted to vote on that
proposal without instruction from the beneficial owner of the shares and no
instruction is given.

What Vote Is Required For Approval Of The Proposals?

Our directors will be elected by a plurality of the votes cast at
the annual meeting. In the election of directors, votes to withhold
authority, abstentions from voting and broker non-votes, if any, will be
disregarded and have no effect on the outcome of the vote.

Ratification of the appointment of the independent auditors
requires the affirmative vote of the holders of a majority of the total
number of votes of our capital stock, present in person or represented by
proxy. With respect to the ratification of the appointment of auditors,
abstentions from voting will have the same effect as voting against such
matter and broker non-votes, if any, will be disregarded and have no effect
on the outcome of the vote.

As of January 31, 2002, our directors and executive officers and
their affiliates had the right to vote 12,726,165 shares of our common
stock and 1,053,259 shares of our series A preferred stock (with 9,750,000
votes or 9.26 votes per share). Those shares represent, in the aggregate,
30% of all votes entitled to vote at the annual meeting. They have
indicated that they will vote, or cause to be voted, all of the shares in
favor of the election of the director nominees and in favor of Proposal 2.

Will Other Matters Be Voted On At The Annual Meeting?

We are not aware of any other matters to be presented at the
annual meeting other than those described in this proxy statement. If any
other matters not described in the proxy statement are properly presented
at the meeting, proxies will be voted in accordance with the best judgment
of the proxy holders.

What Are The Costs Of Soliciting These Proxies And Who Pays Them?

All expenses of soliciting proxies, including clerical work,
printing and postage, will be paid by us. Our directors, officers and other
employees may solicit proxies in person, by mail, by telephone, by
facsimile, through the Internet or by other means of communication, but
such persons will not be specifically compensated for such services. We
will reimburse American Stock Transfer & Trust Company for forwarding proxy
materials to beneficial owners and serving as inspectors of election.

What Other Information Should I Review Before Voting?

For your review, our Form 10-K/A report for the fiscal year ended
December 31, 2000 and our Form 10-Q for the period ended September 30,
2001, are being mailed to stockholders concurrently with this proxy
statement. The Form 10-K/A report and Form 10-Q report, however, are not
part of the proxy solicitation material.

We file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission under the
Securities Exchange Act of 1934. You may read and copy this information at
public reference facilities maintained by the SEC.

You may also obtain copies of this information by mail at
prescribed rates from the Public Reference Room of the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference Room by
calling the Securities and Exchange Commission at 1-800-SEC-0330.

The Securities and Exchange Commission also maintains a website
that contains reports, proxy statements and other information about
issuers, like us, who file electronically with the Securities and Exchange
Commission. The Internet address of that site is www.sec.gov.

PROPOSAL 1
ELECTION OF DIRECTORS

INFORMATION WITH RESPECT TO DIRECTOR NOMINEES

Listed below are the nominees for class 2 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 2 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.

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.

At the special meeting of stockholders held on March 16, 1999, the
stockholders approved an amendment to the Restated 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 Restated Certificate of Incorporation, which was
approved by the stockholders at the March 16, 1999 special meeting, and
Article III, Section 1 of the Amended and Restated Bylaws 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 fixed the total number of directors at seven, consisting of
three class 1 directors, two class 2 directors and two class 3 directors.

Effective as of April 2, 2001, Richard T. Liebhaber, who served
along with Andrew Africk as a class 2 director, resigned as a director of
the Company. Mr. Liebhaber's replacement, John Piccone, resigned as a
director of the Company effective October 29, 2001. On February 13, 2002,
Mr. Killeen was moved by the board of directors from class 1 to class 2 to
fill the vacancy created by Mr. Piccone's resignation and to provide, in
accordance with Article Ninth of the Restated Certificate of Incorporation,
that each class of the board of directors is comprised of as nearly equal a
number of directors as possible given the then total number directors
constituting the board of directors. Currently the number of directors is
six, consisting of two class 1 directors, two class 3 directors and Jeffrey
Killeen and Andrew Africk as the class 2 directors.

Notwithstanding the foregoing, the decision to move Mr. Killeen
from class 1 to class 2 is contingent upon his election by the stockholders
as a class 2 director. In the event that the stockholders do not elect Mr.
Killeen as a class 2 director, (1) Mr. Killeen will remain a class 1
director until the term of the class 1 directors expires at the 2003 annual
meeting of stockholders and until his successor is duly elected and
qualified and (2) Mr. Africk will remain the sole class 2 director until a
successor to fill the vacancy created by Mr. Piccone's resignation is named
by the board of 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 (sometimes referred to as the "Apollo
Stockholders").

On June 4, 1999, the Apollo Stockholders designated Andrew Africk
as their preferred stock director pursuant to the terms of the Restated
Certificate of Incorporation governing the series A preferred stock and Mr.
Africk now serves as a class 2 director at the discretion of the Apollo
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 terms of the Restated Certificate of
Incorporation. On June 15, 2000, the Apollo Stockholders re-elected Mr.
Gross to serve as a class 1 director at the discretion of the Apollo
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 as a preferred stock director. The term of the class 2
directors expires at the annual meeting and until their successors are duly
elected and qualified. The class 3 directors have terms expiring at the
2002 annual meeting of Stockholders (which is expected to be held later
this year) and until their successors are duly elected and qualified. The
term of the class 1 directors expires at the 2003 annual meeting of
Stockholders and until their successors are duly elected and qualified.

NAME AGE CLASS POSITION DIRECTOR SINCE
---- --- ----- -------- --------------

Class 2 nominee to be elected
by common stockholders: 48 2 Director 1998
Jeffrey M. Killeen

Class 2 nominee to be elected by preferred 35 2 Director 1999
stockholders:
Andrew D. Africk

CLASS 2 NOMINEES

Jeffrey M. Killeen. Mr. Killeen has been a director of the Company
since October 1998. Effective January 1, 2002, Mr. Killeen became Chairman
and Chief Executive Officer of Globalspec, Inc., an information services
company. Mr. Killeen was the Chief Executive Officer of Forbes.com from
August 1999 to March 2001. 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.

Andrew D. Africk. Mr. Africk has been a member of the board of
directors since June 1999. Mr. Africk is a partner 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.). Mr. Africk is also a director of Encompass Services
Corporation, as well as several private venture companies.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The board of directors has carefully considered the Class 2
director nominees and believes that their election by the stockholders is
in the best interests of Rare Medium Group and its stockholders and,
accordingly, unanimously recommends that stockholders vote for the class 2
director nominees.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE CLASS 2 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 40 3 Chairman and Chief 1998
Executive Officer

William F. Stasior 61 3 Director 2000

Jeffrey M. Killeen 48 * Director 1998

Marc J. Rowan 38 1 Director 1999

Michael S. Gross 39 1 Director 1999

-----------------
* As noted above, Mr. Killeen was moved by the board of directors from
class 1 to class 2 to fill the vacancy created by Mr. Piccone's
resignation, contingent upon his election by the stockholders as a
class 2 director. In the event that the stockholders do not elect Mr.
Killeen as a class 2 director, he will remain a class 1 director until
the term of the class 1 directors expires at the 2003 annual meeting
of stockholders and until his successor is duly elected and qualified.

Glenn S. Meyers. Mr. Meyers, a class 3 director, is the
co-founder, Chairman and Chief Executive Officer of the Company. He also
served as 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.

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.

Marc J. Rowan. Mr. Rowan, a class 1 director, 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.). 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, a class 1 director, 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. Mr. Gross is also a director
of Allied Waste Industries, Inc., Breuners Home Furnishing, Inc., Clark
Enterprises Inc., CVEO Corporation, Florsheim Group, Inc., United Rentals,
Inc., Encompass Services Corporation and Saks Incorporated.

BOARD MEETINGS AND COMMITTEES

The board of directors held four (4) meetings during the year
ended December 31, 2000 and eight (8) meetings during the year ended
December 31, 2001. Each director attended all of the meetings of the board
of directors and meetings of committees on which he serves.

The board of directors has an audit committee and a compensation
committee which meet as the need arises. The board of directors does not
have a nominating committee. 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 then Executive Vice President and
Chief Financial Officer and, following his resignation from the Company,
with the Company's Senior Vice President and Controller and Senior Vice
President, Finance and Treasurer, 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, 2000 and six (6) times during the year ended
December 31, 2001. The audit committee met on February 14, 2001, with the
Company's auditors to discuss the results of the 2000 audit. The audit
committee is currently composed of Jeffrey M. Killeen, William F. Stasior
and Andrew D. Africk. The compensation committee met twice during the year
ended December 31, 2000 and two (2) times during the year ended December
31, 2001. The compensation committee periodically reviews and evaluates the
compensation of the Company's officers and administers grants of options
from the Company's 1998 Long Term Incentive Plan, and the Amended and
Restated Equity Plan for Directors. The Compensation Committee is currently
composed of Jeffrey M. Killeen and Andrew D. Africk.

The Nasdaq Stock Market, Inc. ("Nasdaq") has adopted rules
relating to the audit committees of public companies with securities listed
on Nasdaq and Nasdaq has recently amended those rules relating, among other
things, to the composition of such audit committees (the "Amended Nasdaq
Rules"). Pursuant to the Amended Nasdaq Rules, the audit committee must
consist of three independent directors, unless the board of directors
determines under exceptional and limited circumstances, that membership on
the committee by one director who is not independent is required by the
best interests of the corporation and its shareholders, and discloses in
the next annual proxy statement subsequent to such determination, the
nature of the relationship and the reasons for that determination. Mr.
Killeen and Mr. Stasior are independent under the Amended Nasdaq Rules. In
light of (i) Mr. Africk's financial sophistication and familiarity with the
Company's finance and accounting practices, (ii) the recent termination of
the Company's merger with Motient Corporation, which, if it had been
consummated, would have resulted in the Company becoming a wholly owned
subsidiary of Motient Corporation and the Company no longer being subject
to the Amended Nasdaq Rules, and (iii) the recent announcement of the
Company's intention to become an active joint venture participant in the
Mobile Satellite Ventures joint venture, the Board of Directors has
determined that exceptional and limited circumstances exist and that it is
in the best interests of the Company and its stockholders for Mr. Africk to
remain a member of the audit committee. In addition, the Company is
undergoing a search to find a director with the appropriate experience in
the satellite industry and who would be independent consistent with the
Amended Nasdaq Rules. A copy of the amended and restated charter of the
audit committee is attached as Annex A to this proxy statement.

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 a director of the Company in 1998, 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. All of these options vest ratably over three years.
On December 21, 2001, the exercise prices of these options were repriced to
$0.60 per share, the fair market value of the common stock on that date.
For more information regarding the repricing of these options, see the
section entitled "Repricing of Options" below.

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 S. 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. On December 21, 2001, the exercise prices of the
options granted to Messrs. Africk, Rowan, and Gross were repriced to $0.60
per share, the fair market value of the common stock on that date. For more
information regarding the repricing of these options, see the section
entitled "Repricing of Options" below.

Upon becoming a director of the Company in April, 2000, William
Stasior was granted an option to purchase 75,000 shares of common stock on
April 26, 2000 under the 1998 Long Term Incentive Plan exercisable at
$21.0625 per share, the fair market value of the common stock on the date
of grant. All of these options vest ratably over three years. During the
year 2000, Mr. Stasior served as a consultant to the Company's Internet
professional services subsidiary, Rare Medium, Inc., and pursuant to a
consulting agreement Mr. Stasior received compensation of $10,000 per month
for his consulting services. This consulting agreement was terminated as of
July 2, 2001. In addition, as compensation for his consulting services Mr.
Stasior received an option to purchase an additional 75,000 shares of
common stock on April 26, 2000 under the 1998 Long Term Incentive Plan
exercisable at $21.0625 per share, the fair market value of the common
stock on the date of grant. All of these options were to vest ratably over
three years; however, upon the termination of Mr. Stasior's consulting
agreement with Rare Medium, Inc. as of July 2, 2001, the 50,000 unvested
options related to the remaining term of this agreement were cancelled. On
December 21, 2001, the exercise prices of these options were repriced to
$0.60 per share, the fair market value of the common stock on that date.
For more information regarding the repricing of these options, see the
section entitled "Repricing of Options" below.

It is anticipated that future grants of stock options to directors
will principally be made under the Company's 1998 Long Term Incentive Plan.

EXECUTIVE OFFICERS

The names of the Company's current executive officers, and certain
information about them, is set forth below.

NAME AGE POSITION OFFICER SINCE
---- --- -------- -------------

Glenn S. Meyers 40 Chairman and Chief Executive Officer 1998

Robert C. Lewis 36 Senior Vice President, General Counsel and Secretary 1998

Craig C. Chesser 41 Senior Vice President, Finance and Treasurer 1998

Michael A. Hultberg 35 Senior Vice President and Controller 1999

Glenn S. Meyers - Chairman and Chief Executive Officer. Mr. Meyers
is the co-founder, Chairman and Chief Executive Officer of the Company. He
also served as 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.

Robert C. Lewis - Senior 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. Mr.
Lewis was appointed the Company's Senior Vice President on July 26, 2000.
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 - Senior Vice President Finance and Treasurer.
Mr. Chesser has been a Vice President of the Company since July 1998 and
has been Vice President Finance since February, 2001 and 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 - Senior 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 Apollo investment, 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 had 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, through its Rare Medium, Inc.
subsidiary, has provided 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 Apollo have an investment or in which they have
considered investing. In addition, in March 2000 the Company committed
$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 Apollo's
1999 investment transaction for which it 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 invested, indirectly, $10,000,000 in the
securities of the Company at the time of Apollo's 1999 investment. 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 entities.

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. Mr. Winograd
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 "Employment Contracts and Change in Control Arrangements" on page
20.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended,
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 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 Securities and Exchange Commission 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 years
ended December 31, 2000 and December 31, 2001, respectively, its officers,
directors and greater than 10% stockholders complied with all Section 16(a)
filing requirements.

PROPOSAL 2
RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS
OF THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 2001

The firm of KPMG LLP, independent accountants, audited the
financial statements of the Company for the year ended December 31, 2000.
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,
2001. 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 2.

AUDIT FEES

For the fiscal year ended December 31, 2000, the aggregate fees
for professional services rendered for the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2000 and the
reviews of the financial statements included in the Company's Forms 10-Q
for the fiscal year ended December 31, 2000 were $350,000, all of which has
been billed.

For the fiscal year ended December 31, 2001, the aggregate fees
for professional services rendered for the audit of the Company's annual
financial statements for the fiscal year ended December 31, 2001 and the
reviews of the financial statements included in the Company's Forms 10-Q
for the fiscal year ended December 31, 2001 were $215,000, $90,000 of which
has been billed.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

For the fiscal years ended December 31, 2000 and December 31,
2001, respectively, the Company did not incur any charges or pay any fees
related to any financial information systems design and implementation
services provided by KPMG LLP.

ALL OTHER FEES

For the fiscal year ended December 31, 2000, the aggregate fees
billed for services rendered by KPMG LLP, other than the fees discussed in
the foregoing paragraphs, were $609,375, which related to services for
offerings, registration statements and related filings, due diligence
related services and tax services.

For the fiscal year ended December 31, 2001, the aggregate fees
billed for services rendered by KPMG LLP, other than the fees discussed in
the foregoing paragraphs, were $474,425, which related to services for
offerings, registration statements and related filings, due diligence
related services and tax services.

The audit committee has concluded that provision of these
non-audit services is compatible with maintaining KPMG LLP's independence.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors has carefully considered Proposal 2, the
proposal to ratify the appointment of KPMG LLP as independent auditors of
the Company, and believes that its approval by the stockholders is in the
best interests of Rare Medium Group and its stockholders and, accordingly,
unanimously recommends that stockholders vote for the approval of Proposal
2.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table and notes thereto set forth certain information, as of
February 15, 2002 (except as noted otherwise), 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.

NAME AND ADDRESS POSITION NUMBER OF SHARES OF PERCENTAGE
COMMON STOCK OF CLASS
BENEFICIALLY OWNED (1)

Glenn S. Meyers Chairman and Chief Executive Officer 1,000,000 1.5%(2)

Suresh V. Mathews Former President and Chief Operating Officer 1,000,000 1.5%(3)

Craig C. Chesser Senior Vice President Finance and Treasurer 75,000 *(4)

Michael A. Hultberg Senior Vice President and Controller 50,000 *(2)

Robert C. Lewis Senior Vice President, General Counsel and 95,000 *(2)
Secretary

Jeffrey J. Kaplan Former Executive Vice President and Chief 87,500 *(5)
Financial Officer

Jeffrey M. Killeen Director 75,000 *(2)

William Stasior Director 50,000 *(2)

Andrew D. Africk Director 41,568,301 44.1%(6)
c/o Rare Medium Group, Inc.
44 W. 18th Street, 6th Floor
New York, New York 10011

Marc J. Rowan Director 41,568,301 44.1%(7)
c/o Rare Medium Group, Inc.
44 W. 18th Street, 6th Floor
New York, New York 10011

Michael S. Gross Director 41,568,301 44.1%(8)
c/o Rare Medium Group, Inc.
44 W. 18th Street, 6th Floor
New York, New York 10011

Apollo Investment Fund IV, 41,518,301 44.1%(9)
L.P.
Two Manhattanville Road
Purchase, New York 10577

All executive officers, 43,013,300 44.9%(10)
directors and nominees as a
group (9 persons)

* Represents beneficial ownership of less than 1%.

(1) Beneficial ownership has been determined pursuant to Rule 13d-3 under
the Exchange Act.

(2) Represents options to purchase shares of Common Stock that are
currently exercisable, but does not include options that become exercisable
upon a change of control of the Company.

(3) Includes options to purchase 980,431 shares of Common Stock that are
currently exercisable. Mr. Mathews resigned as President and Chief
Operating Officer of Rare Medium, Inc., effective as of May 12, 2001; his
beneficial ownership is stated as of that date.

(4) Includes options to purchase 58,334 shares of Common Stock that are
currently exercisable.

(5) Represents options to purchase 87,500 shares of Common Stock that are
currently exercisable. Mr. Kaplan resigned as Executive Vice President and
Chief Financial Officer of the Company effective as of February 14, 2001;
his beneficial ownership is stated as of that date.

(6) Includes an aggregate of (i) 12,709,499 shares of Common Stock acquired
through the exercise of Series 1-A warrants and (ii) 28,808,801 shares of
Common Stock issuable to Apollo Investment Fund IV, L.P., Apollo Overseas
Partners IV, L.P. and AIF IV/RRRR LLC (collectively, 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.
Includes options to purchase 50,000 shares of Common Stock that are
currently exercisable, but does not include options that become exercisable
upon a change of control of the Company.

(7) Includes an aggregate of (i) 12,709,499 shares of Common Stock acquired
through the exercise of Series 1-A warrants and (ii) 28,808,801 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. Includes options to purchase
50,000 shares of Common Stock that are currently exercisable, but does not
include options that become exercisable upon a change of control of the
Company.

(8) Includes an aggregate of (i) 12,709,499 shares of Common Stock acquired
through the exercise of Series 1-A warrants and (ii) 28,808,801 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. Includes options to purchase
50,000 shares of Common Stock that are currently exercisable, but does not
include options that become exercisable upon a change of control of the
Company.

(9) Represents the aggregate of (i) 12,709,499 shares of Common Stock
acquired through the exercise of Series 1-A warrants and (ii) 28,808,801
shares of Common Stock issuable upon conversion of the aggregate of
1,053,259 shares of the Company's Series A Preferred Stock and the exercise
of an aggregate of 111,089 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 the exercise of all the Series 1-A warrants
and Series 2-A warrants held by the Apollo Stockholders, such 41,518,301
shares of Common Stock would consist of 31,796,475 shares of Common Stock
beneficially owned by Apollo Investment Fund IV, L.P., 1,705,211 shares of
Common Stock beneficially owned by Apollo Overseas Partners IV, L.P. and
8,016,614 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 with respect to the Series A Preferred
Stock as of February 15, 2002, or 9.26 votes per share of Series A
Preferred Stock. Messrs. Africk, Rowan and Gross, directors of the Company
and associated with Apollo Advisors IV, L.P., disclaim beneficial ownership
of the shares held by the Apollo Stockholders.

(10) Messrs. Africk, Rowan and Gross, directors of the Company and
associated with Apollo Advisors IV, L.P., disclaim beneficial ownership of
shares held by the Apollo Stockholders. See footnote numbers 6, 7 and 8
above. Includes options to purchase an aggregate of 1,478,334 shares of
Common Stock that are currently exercisable, but does not include options
that become exercisable upon a change of control of the Company.

EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth, for the four
years ended December 31, 2001, the compensation for services in all
capacities earned by the Company's Chief Executive Officer and its next
most highly compensated executive officers.

Summary Compensation Table

NAME AND YEAR SALARY BONUS OTHER ANNUAL RESTRICTED SECURITIES LTIP ALL OTHER
PRINCIPAL COMPENSATION STOCK UNDER-LYING PAY- COMPENSATION
POSITION AWARD(S) OPTIONS/SARS OUTS
($) (#) ($)

Glenn S. Meyers 2001 $278,096 -- $18,000(1) -- -- -- --
Chairman and 2000 $267,400 $1,469,090 $18,000(1) -- -- -- --
Chief Executive 1999 257,192 2,157,889 17,600(1) -- -- -- --
Officer 1998 178,082 35,193 20,000(1) -- 2,000,000 -- --

Suresh V. Mathews 2001 325,000 -- -- -- -- -- $1,800(3)
Former President 2000 233,308 -- -- -- 250,000 -- $1,760(3)
and
Chief Operating 1999 208,558 -- -- -- 1,000,000 -- 1,514(3)
Officer (2)

Jeffrey J. Kaplan 2001 39,150 -- 3,000(1) -- -- -- 1,274(3)
Former Executive 2000 227,492 65,000 16,978(1) -- -- -- 2,303(3)
Vice
President and 1999 64,039 -- 3,850(1) -- 350,000 -- --
Chief
Financial Officer(3)

Craig C. Chesser 2001 164,077 90,000 1,500(1) -- 100,000 -- 2,500(3)
Senior Vice 2000 133,961 40,000 6,000(1) -- 25,000 -- 2,500(3)
President Finance 1999 118,692 10,000 3,000(1) -- 32,500 -- 2,500(3)
And Treasurer (5) 1998 43,846 -- -- -- 17,500 -- --

Michael A. 2001 177,135 90,000 3,000(1) -- 100,000 -- --
Hultberg
Senior Vice 2000 145,000 40,000 -- -- -- -- --
President and
Controller (5) 1999 25,096 -- -- -- 75,000 -- --

Robert C. Lewis 2001 140,000 90,000 6,000(1) -- 100,000 -- 2,500(3)
Senior Vice 2000 128,692 40,000 -- -- -- -- 2,500(3)
President,
General Counsel 1999 110,135 -- -- -- 68,000 -- 2,500(3)
and
Secretary(5)(6) 1998 47,596 -- -- -- 32,000 -- --

--------------

(1) Represents non-accountable expense allowance.

(2) Mr. Mathews resigned as President and Chief Operating Officer of Rare
Medium, Inc., effective as of May 12, 2001.

(3) Represents 401(k) employer matching contributions.

(4) Mr. Kaplan resigned as Executive Vice President and Chief Financial
Officer of the Company, effective as of February 14, 2001.

(5) Subject to certain conditions, including such officer's continued
employment with the Company through January 5, 2002, the exercise
prices of these options (excluding options granted in 2001) were
repriced to $0.13, the fair market value of the common stock as of
October 5, 2001, the date of repricing. For more information regarding
the repricing of these options, see the section entitled "Repricing of
Options" below.

(6) As a result of the resignations of Messrs. Mathews and Kaplan in 2001,
Mr. Lewis was one of the Company's four most highly compensated
executive officers at the end of 2001.

The following table sets forth information concerning grants of
stock options to purchase common stock during the years ended December 31,
2000 and December 31, 2001, respectively, to the named executive officers.

Option / SAR Grants in the Last Two Years

2000

NAME NUMBER OF PERCENT OF TOTAL EXERCISE OR EXPIRATION POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS/SARS BASE PRICE DATE ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO ($/SHARE) STOCK APPRECIATION FOR OPTION TERM
OPTIONS /SARS EMPLOYEES IN 5% 10%
GRANTED FISCAL YEAR (1)

Glenn S. Meyers -- 0.0% N/A N/A N/A N/A
Suresh V. Mathews (5) 250,000(2)(3) 2.1% $15.313 7/19/05 $1,057,640 $2,337,109
Jeffrey J. Kaplan (6) -- 0.0% N/A N/A N/A N/A
Craig C. Chesser 25,000(2)(4) 0.2% $14.500 7/26/05 100,152 221,310
Michael A. Hultberg -- 0.0% N/A N/A N/A N/A

---------------

(1) The number of shares of Common Stock covered by the options is 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.

(2) 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.

(3) These options were granted on July 19, 2000 at an exercise price of
$15.313, the per share fair market vale of the Common Stock at that time.
The options have a term of five (5) years. Options are exercisable in three
(3) equal annual installments, with the first installment becoming
exercisable on the one-year anniversary of the date of employment.

(4) These options were granted on July 26, 2000 at an exercise price of
$14.50, the per share fair market vale of the Common Stock at that time.
The options have a term of five (5) years. Options are exercisable in three
(3) equal annual installments, with the first installment becoming
exercisable on the one-year anniversary of the date of employment. Subject
to certain conditions, including Mr. Chesser's continued employment with
the Company through January 5, 2002, the exercise price for these options
was repriced to $0.13, the fair market value of the Common Stock as of
October 5, 2001, the date of repricing.

(5) Mr. Mathews resigned as President and Chief Operating Officer of Rare
Medium, Inc., effective as of May 12, 2001.

(6) Mr. Kaplan resigned as Executive Vice President and Chief Financial
Officer of the Company, effective as of February 14, 2001.

2001

NAME NUMBER OF PERCENT OF TOTAL EXERCISE OR EXPIRATION POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS/SARS BASE PRICE DATE ASSUMED ANNUAL RATES OF
UNDER- GRANTED TO ($/SHARE) STOCK APPRECIATION FOR OPTION TERM
LYING EMPLOYEES IN 5% 10%
OPTIONS/ FISCAL YEAR (1)
SARS
GRANTED

Glenn S. Meyers -- 0.0% N/A N/A N/A N/A
Suresh V. Mathews (4) -- 0.0% N/A N/A N/A N/A
Jeffrey J. Kaplan (5) -- 0.0% N/A N/A N/A N/A
Craig C. Chesser 100,000(2)(3) 3.9% $.600 12/20/06 6,150 12,600
Michael A. Hultberg 100,000(2)(3) 3.9% $.600 12/20/06 6,150 12,600
Robert C. Lewis (6) 100,000(2)(3) 3.9% $.600 12/20/06 6,150 12,600
--------------

(3) These options were granted on December 21, 2001 at an exercise price of
$0.60, the per share fair market vale of the Common Stock at that time. The
options have a term of five (5) years. Options are exercisable on the
one-year anniversary of the date of grant.

(4) Mr. Mathews resigned as President and Chief Operating Officer of Rare
Medium, Inc., effective as of May 12, 2001.

(5) Mr. Kaplan resigned as Executive Vice President and Chief Financial
Officer of the Company, effective as of February 14, 2001.

(6) As a result of the resignations of Messrs. Mathews and Kaplan in 2001,
Mr. Lewis was one of the Company's four most highly compensated executive
officers at the end of 2001.

The following table sets forth information concerning the exercise
of options to purchase shares of common stock by the named executive
officers during the years ended December 31, 2000 and December 31, 2001, 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, 2000 and December 31, 2001, respectively.

Aggregated Option/SAR Exercises in the Last Year and Year-End Option/SAR Values

2000

NAME NUMBER OF VALUE NUMBER OF VALUE OF
SECURITIES REALIZED SECURITIES UNEXERCISED
UNDERLYING UNDERLYING IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON FISCAL Y/E (#) FISCAL Y/E
EXERCISE (#) EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE

Glenn S. Meyers -- -- 466,666/933,334 0/0
Suresh V. Mathews (1) 19,569 $262,029 230,431/1,000,000 0/0
Jeffrey J. Kaplan (2) -- -- 87,500/262,500 0/0
Craig C. Chesser -- -- 33,334/25,000 0/0
Michael A. Hultberg -- -- 25,000/50,000 0/0

--------------

(1) Mr. Mathews resigned as President and Chief Operating Officer of Rare
Medium, Inc., effective as of May 12, 2001.

(2) Mr. Kaplan resigned as Executive Vice President and Chief Financial
Officer of the Company, effective as of February 14, 2001.

2001

Glenn S. Meyers -- -- 866,666/533,334 0/0
Suresh V. Mathews (1) -- -- 980,431/0 0/0
Jeffrey J. Kaplan (2) -- -- 87,500/0 0/0
Craig C. Chesser -- -- 58,334/100,000 35,584/14,000
Michael A. Hultberg -- -- 50,000/125,000 30,500/29,250
Robert C. Lewis (3) -- -- 95,000/100,000 57,950/14,000

---------------

(1) Mr. Mathews resigned as President and Chief Operating Officer of Rare
Medium, Inc., effective as of May 12, 2001.

(2) Mr. Kaplan resigned as Executive Vice President and Chief Financial
Officer of the Company, effective as of February 14, 2001.

(3) As a result of the resignations of Messrs. Mathews and Kaplan in 2001,
Mr. Lewis was one of the Company's four most highly compensated executive
officers at the end of 2001.

EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS

MEYERS EMPLOYMENT AGREEMENT

In connection with the transactions consummated pursuant to the
1998 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, as amended, 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. This 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 committee, in amounts similar to the incentive bonuses
previously received by him. 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.

OTHER CURRENT EMPLOYMENT AGREEMENTS

The Company has employment agreements with each of Craig Chesser,
Michael Hultberg and Robert Lewis, each of whom is an officer of the
Company. Under these agreements, if, after 90 days following a change in
control of the Company, the executive terminates his employment, the
executive is entitled to receive severance compensation and benefits in a
lump sum payment consisting of one year of his current salary and the right
to exercise all vested stock options and unvested stock options which
become exercisable upon a change of control through the option expiration
date for such options. For purposes of these agreements, a change in
control of the Company occurs when, among other things, the stockholders of
the Company approve a merger of the Company.

STOCK PLANS

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, 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. In 2000, the board of directors amended and
restated the Plan to: (1) increase the number of shares of common stock
available for issuance under the Plan to 23,000,000; (2) provide that no
participant in the Plan may be granted options and stock appreciation
rights, or SARs, that become exercisable in any one year for more than
700,000 shares of common stock and awards other than options and SARs that
may be settled for the first time in any one year by delivery of more than
350,000 shares of common stock; and (3) provide that all options and SARs
will terminate no later than the tenth anniversary of the date of grant.
These amendments to the Plan were ratified by the Company's stockholders on
June 15, 2000. As of December 31, 2000 and 2001, there were approximately
7.3 million and 19.0 million options, respectively, available for grant
under the Plan.

The Company's Nonqualified Stock Plan ("NQSOP") for directors,
officers and key employees of the Company expired on July 18, 2000. The
Company did not make any grants of options under the NQSOP in 2000.

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, 2000
and 2001. The Company did not make any grants to directors under the
Amended and Restated Equity Plan for Directors in 2000 or in 2001.
Subsequent to November 1998, grants of stock options to directors have been
made under the Company's Amended and Restated 1998 Long Term Incentive
Plan.

BOARD AUDIT COMMITTEE REPORT

The audit committee has reviewed and discussed the audited
financial statements with the Company's management. The audit committee has
discussed with the Company's independent auditors the matters required to
be discussed by SAS 61 (Codification of Statements on Auditing Standards,
AU Section 380), as may be modified or supplemented. The audit committee
has received the written disclosures and the letter from the Company's
independent accountants required by Independence Standards Board Standard
No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), as may be modified or supplemented, and
has discussed with the Company's independent accountant the independent
accountant's independence. Based on the review and discussions referred to
above, the audit committee recommended to the board of directors that the
audited financial statements be included in the Company's Annual Report on
Form 10-K/A for the year ended December 31, 2000.

By the Audit Committee
of the Board of Directors,

/s/ JEFFREY M. KILLEEN
JEFFREY M. KILLEEN

/s/ ANDREW D. AFRICK
ANDREW D. AFRICK

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 D. Africk.

COMPENSATION PHILOSOPHY AND REVIEW

The Company's compensation philosophy for its executive officers
serves two principal purposes: (1) 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 (2) 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 2000 and 2001 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.

Members of the board of directors reviewed and approved each
employment agreement entered into between the Company and an executive
officer in 2000 and in 2001, as well as stock options granted to executive
officers in 2000 and 2001. In determining compensation levels for 2000 and
2001, 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
and awards 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 2000 and 2001 and awarded bonuses to certain other executive officers of
the Company in 2000 and in 2001. The compensation committee believes that
in the highly competitive, emerging markets in which the Company has
operated, 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 2000 and
2001, 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 $1,469,090 for 2000 and no incentive compensation for 2001.

The compensation committee believes that the base salary levels of
the executive officers, including Mr. Meyers, are at 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 has been 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,
933,333 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
2000, 2001 and to date. In addition to Mr. Meyers, during 2000 and 2001 the
compensation committee or the board of directors as a whole approved grants
of options to purchase an aggregate of 25,000 and 300,000 shares,
respectively, of the common stock to other executive officers as a group.

REPRICING OF OPTIONS

Report of the Compensation Committee. On October 5, 2001, the
compensation committee determined that because the outstanding options held
by certain executive officers and employees were exercisable at prices that
were significantly above prevailing market prices for the Company's common
stock, they no longer provided an adequate level of incentive. Accordingly,
to reincentivize certain of the remaining executive officers and employees
of the Company and in recognition of their service to the Company the
compensation committee approved the repricing of the exercise prices of
options to purchase an aggregate of 350,000 shares of common stock to $0.13
per share, the fair market value at the date of the repricing. On December
21, 2001, the compensation committee approved an additional repricing of
the exercise prices of options to purchase an aggregate of 400,000 shares
of common stock held by non-management directors to $0.60, per share, the
fair market value at the date of the repricing.

10-Year Option Repricings. The following table provides
information related to the repricing of each option held by the executive
officers of the Company during the last ten completed fiscal years.

NAME DATE NUMBER OF MARKET PRICE OF EXERCISE PRICE NEW LENGTH OF
SECURITIES STOCK AT TIME OF AT TIME OF EXERCISE PRICE ORIGINAL
UNDERLYING REPRICING OR REPRICING OR ($) OPTION TERM
OPTIONS AMENDMENT AMENDMENT REMAINING
REPRICED OR ($) AT DATE OF
AMENDED REPRICING OR
(#) AMENDMENT

Craig C. Chesser(1) 10/5/01 11,666 $0.13 $2.38 $0.13 23 Months
10/5/01 8,334 $0.13 $5.11 $0.13 28 Months
10/5/01 13,334 $0.13 $8.56 $0.13 36 Months
10/5/01 25,000 $0.13 $14.50 $0.13 46 Months

Michael A. Hultberg(1) 10/5/01 75,000 $0.13 $14.75 $0.13 37 Months

Robert C. Lewis(1) 10/5/01 32,000 $0.13 $2.38 $0.13 23 Months
10/5/01 38,000 $0.13 $4.77 $0.13 30 Months
10/5/01 25,000 $0.13 $8.56 $0.13 36 Months

(1) Subject to certain conditions, including such executive's
continued employment with the Company through January 5, 2002, the exercise
price for these options was repriced to $0.13, the fair market value of the
common stock as of October 5, 2001, the date of repricing.

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 2000 did not exceed the $1,000,000 limit for
any individual executive. In addition, total cash compensation paid for
salaries and bonuses during 2001 did not 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
JEFFREY M. KILLEEN

/s/ ANDREW D. AFRICK
ANDREW D. AFRICK

PERFORMANCE GRAPHS

2000

The following graph shows a five year comparison of cumulative
total shareholder returns for the Company, the Nasdaq Market Index, and the
Media General Internet Software and Services Index from December 31, 1995
through December 31, 2000. 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 Internet
Software and Services 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 OMITTED

LEGEND:

FISCAL YEAR ENDING

COMPANY/INDEX/MARKET 12/29/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/29/2000
-------------------- ---------- ---------- ---------- ---------- ---------- ----------

Rare Medium Group, Inc 100.00 49.43 15.91 37.50 310.23 17.33
Media General Internet Software 100.00 73.67 43.68 114.59 333.51 73.76
& Services Index
Nasdaq Market Index 100.00 124.27 152.00 214.39 378.12 237.66

(1) Assumes $100 invested on January 1, 1995 and reinvestment of dividends.

(2) The Media General "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.

2001

The following graph shows a five year comparison of cumulative
total shareholder returns for the Company, the Nasdaq Market Index, and the
Media General Internet Software and Services Index from December 31, 1996
through December 31, 2001. 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 Internet
Software and Services 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 OMITTED

LEGEND:

FISCAL YEAR ENDING

COMPANY/INDEX/MARKET 12/29/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/29/2001
-------------------- ---------- ---------- ---------- ---------- ---------- ----------

Rare Medium Group, Inc 100.00 32.18 75.86 627.59 35.05 13.61
Media General Internet Software & 100.00 59.28 155.54 452.69 100.12 67.56
Services Index
Nasdaq Market Index 100.00 122.32 172.52 304.29 191.25 152.46

(1) Assumes $100 invested on January 1, 1996 and reinvestment of dividends.

(2) The Media General "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.

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/A for the year ended
December 31, 2000 and the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 2001, each filed with the SEC, copies of which
are being mailed to Stockholders concurrently with this proxy statement.

Copies of the Company's Annual Report on Form 10-K/A for the year
ended December 31, 2000 and the Company's Quarterly Report on Form 10-Q for
the period ended September 30, 2001 are being mailed simultaneously with
this proxy statement. The Form 10-K/A report and Form 10-Q report, however,
are not part of the proxy solicitation material.

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

The Company expects that the date of the 2002 Annual Meeting of
Stockholders will change by more than 30 days from the 2001 annual meeting.
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 2002 Annual
Meeting of Stockholders must submit the same to the Secretary of the
Company within a reasonable time before the Company begins to print and
mail its proxy materials at the Company's principal executive office, 44 W.
18th Street, 6th Floor, New York, NY 10011. In order for a shareholder
proposal at the 2002 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 within a reasonable time
before the Company mails its proxy materials.

ADDITIONAL INFORMATION

The Company is a reporting company and files annual, quarterly and
current reports, proxy statements and other information with the Securities
and Exchange Commission. You may read and copy these reports, proxy
statements and other information at the Securities and Exchange Commission
public reference rooms. You can request copies of these documents by
writing to the Securities and Exchange Commission and paying a fee for the
copying costs. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for more information about the operation of the public
reference rooms. The Company's Securities and Exchange Commission filings
are also available at the Securities and Exchange Commission's website at
"www.sec.gov." In addition, you can read and copy the Company's Securities
and Exchange Commission 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/A

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/A for the year
ended December 31, 2000, filed with the SEC is available without charge by
writing to Robert C. Lewis, Senior Vice President, General Counsel and
Secretary, Rare Medium Group, Inc., 44 W. 18th Street, 6th Floor, New York,
New York 10011.

IMPORTANT
MAIL YOUR SIGNED PROXY CARD

Please complete, sign, date and mail the enclosed Proxy Card in the
enclosed self-addressed envelope.

By Order of the Board of Directors,

/s/ Robert C. Lewis
-----------------------------------------
Robert C. Lewis, Senior Vice President,
General Counsel and Secretary
February 25, 2002
New York, New York

-------------------------------------------------------------------------------

COMMON STOCK PROXY

RARE MEDIUM GROUP, INC.
44 W. 18TH STREET, 6TH FLOOR, NEW YORK, NEW YORK 10011
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MARCH 28, 2002

The undersigned hereby appoints Glenn S. Meyers, Chairman and
Chief Executive Officer of Rare Medium Group, Inc. and Robert C. Lewis,
Senior Vice President, General Counsel and Secretary of Rare Medium Group,
Inc., and each of them, with full power of substitution, proxies to
represent the undersigned at the annual meeting of stockholders of Rare
Medium Group, Inc. to be held at 8:00 a.m., local time, on March 28, 2002,
at the Greenville Room, Hotel du Pont, 11th and Market Streets, Wilmington,
Delaware 19801, and at any adjournment or postponement thereof and thereat
to vote all of the shares of stock which the undersigned would be entitled
to vote, with all the powers the undersigned would possess if personally
present.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
RARE MEDIUM. Unless otherwise specified in the boxes provided below, this
Proxy will be a vote FOR the director nominee in Proposal 1 and FOR
Proposal 2, and in the discretion of the above named persons as to any
other matter that may properly come before the annual meeting.

1. The election of Jeffrey M. Killeen to the Board of Directors.

[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY

2. The ratification of the appointment of KPMG LLP as the
independent auditors of the Company for the year ended December 31, 2001.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In the discretion of persons named above, to act upon such
other business as may properly come before the special meeting or any
adjournment or postponement thereof.

THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE
MANNER INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS
INDICATED, THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" THE DIRECTOR
NOMINEE ON PROPOSAL 1 AND "FOR" PROPOSAL 2 SET FORTH ON THE REVERSE SIDE
HEREOF. IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL MEETING, IT
IS THE INTENTION OF THE PERSONS NAMED ABOVE TO VOTE SUCH PROXIES IN
ACCORDANCE WITH THEIR BEST JUDGMENT.

------------------------
Signature

Dated: __________________, 2002

In case of joint owners, each joint owner must sign. If signing
for a corporation or partnership or an agent, attorney or fiduciary,
indicate the capacity in which you are signing.

PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS ON THIS CARD
AND RETURN IN THE ENCLOSED ENVELOPE

-------------------------------------------------------------------------------

PREFERRED STOCK PROXY

RARE MEDIUM GROUP, INC.
44 W. 18TH STREET, 6TH FLOOR, NEW YORK, NEW YORK 10011
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MARCH 28, 2002

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
RARE MEDIUM. Unless otherwise specified in the boxes provided below, this
Proxy will be a vote FOR each of the director nominees in Proposal 1 and
FOR Proposal 2, and in the discretion of the above named persons as to any
other matter that may properly come before the annual meeting.

1. The election of the following nominees to the Board of
Directors:

Jeffrey M. Killeen

[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY

Andrew D. Africk

[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY

2. The ratification of the appointment of KPMG LLP as the
independent auditors of the Company for the year ended December 31, 2001.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In the discretion of persons named above, to act upon such
other business as may properly come before the special meeting or any
adjournment or postponement thereof.

THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE
MANNER INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS
INDICATED, THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" EACH OF THE
DIRECTOR NOMINEES IN PROPOSAL 1 AND "FOR" PROPOSAL 2 SET FORTH ON THE
REVERSE SIDE HEREOF. IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL
MEETING, IT IS THE INTENTION OF THE PERSONS NAMED ABOVE TO VOTE SUCH
PROXIES IN ACCORDANCE WITH THEIR BEST JUDGMENT.

------------------------
Signature

Dated: __________________, 2002

In case of joint owners, each joint owner must sign. If signing
for a corporation or partnership or an agent, attorney or fiduciary,
indicate the capacity in which you are signing.

PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS ON THIS CARD
AND RETURN IN THE ENCLOSED ENVELOPE

Annex A

AMENDED AND RESTATED CHARTER OF THE
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

I. PURPOSE

The primary function of the Audit Committee is to assist the Board
of Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the
Corporation to any governmental body or the public; the Corporation's
systems of internal controls regarding finance, accounting and legal
compliance that management and the Board have established; and the
Corporation's auditing, accounting and financial reporting processes
generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence to, the
Corporation's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:

Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.

Review and appraise the audit efforts of the Corporation's
independent accountants and internal auditing department.

Provide an open avenue of communication among the independent
accountants, financial and senior management and the Board of Directors.

The Audit Committee will primarily fulfill these responsibilities
by carrying out the activities enumerated in Section IV of this Charter.

II. COMPOSITION

The Audit Committee shall be comprised of three or more directors
as determined by the Board, each of whom shall be independent directors,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee. Notwithstanding the foregoing, the Audit Committee may
contain one director who is not independent if the Board, under exceptional
and limited circumstances, determines that membership on the Audit
Committee by the individual is required by the best interests of the
Corporation and its shareholders, and the Board discloses, in the next
annual proxy statement subsequent to such determination, the nature of the
relationship and the reasons for that determination. All members of the
Committee shall have a working familiarity with basic finance and
accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise. Committee members may
enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Corporation or an outside consultant.

The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall
be duly elected and qualified. Unless a Chair is elected by the full Board,
the members of the Committee may designate a Chair by majority vote of the
full Committee membership.

III. MEETINGS

The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Committee may invite members of
management or others to attend meetings and provide pertinent information,
as necessary. As part of its job to foster open communication, the
Committee should meet at least annually with management and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet with the
independent accountants and management quarterly to review the
Corporation's financials consistent with IV below.

IV. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties the Audit Committee
shall:

Documents/Reports Review

1. Review and update this Charter periodically, at least annually,
as conditions dictate.

2. Review the organization's annual financial statements filed on
Form 10-K or other financial information submitted to any governmental
body, or the public, including any certification, report, opinion, or
review rendered by the independent accountants.

3. Review with financial management and the independent
accountants the proposed scope and approach for the audit.

4. Review with financial management and the independent
accountants the earnings release and/or the 10-Q prior to release of
earnings and/or the filing of the 10-Q.

Independent Accountants

5. Recommend to the Board of Directors the selection of the
independent accountants, considering independence and effectiveness and
approve the fees and other compensation to be paid to the independent
accountants. On an annual basis, the Committee should review and discuss
with the accountants all significant relationships the accountants have
with the Corporation to confirm the accountants' independence. The
Committee shall also confirm the independent accountants' understanding of
their accountability to the Board of Directors and the Committee as
representatives of the shareholders. The Committee shall also be
responsible for obtaining from the accountants a formal written statement
of the accountants' relationships with the Corporation, consistent with
Independence Standards Board Standard 1.

6. Review the performance of the independent accountants and
approve any proposed discharge of the independent accountants when
circumstances warrant.

7. Periodically consult with the independent accountants out of
the presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.

8. Review with management and the independent accountants the
significant financial, legal and/or operational risks or exposures and
assess the steps management has taken to minimize such risks.

Financial Reporting Processes

9. In consultation with the independent accountants, review the
integrity of the organization's financial reporting processes, both
internal and external.

10. Consider the independent accountants' judgments about the
quality and appropriateness of the Corporation's accounting principles as
applied in its financial reporting.

11. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as suggested
by the independent accountants or management.

12. Provide oversight and review of the Company's asset management
policies, including a quarterly review of the investment policies and
performance of the Company's investments.

Process Improvement

13. Establish regular and separate systems of reporting to the
Audit Committee by each of management and the independent accountants
regarding any significant judgments made in management's preparation of the
financial statements and the view of each as to appropriateness of such
judgments.

14. Following completion of the annual audit, review separately
with each of management and the independent accountants any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.

15. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the financial
statements.

16. Review with the independent accountants and management the
extent to which changes or improvements in financial or accounting
practices, as approved by the Audit Committee, have been implemented.

Legal Compliance

17. Review, with the organization's counsel, legal compliance
matters including corporate securities trading policies.

18. Review, with the organization's counsel, any legal matter that
could have a significant impact on the organization's financial statements.

19. Perform any other activities consistent with this Charter, the
Corporation's Bylaws and governing law, as the Committee or the Board deems
necessary or appropriate.