SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or 14a-12
METROMEDIA FIBER NETWORK, INC.
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(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2 ) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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[LOGO]
C/O METROMEDIA FIBER NETWORK SERVICES, INC.
ONE NORTH LEXINGTON AVENUE
WHITE PLAINS, NEW YORK, 10601
April 14, 1999
Dear Stockholder:
On behalf of the board of directors, I wish to extend to you a cordial
invitation to attend the annual meeting of stockholders of Metromedia Fiber
Network, Inc., which will be held on the Concourse Level at 1285 Avenue of the
Americas, New York, New York 10019 at 10:00 a.m., Eastern Daylight time, on
Tuesday, May 18, 1999. I look forward to greeting as many stockholders as
possible at the annual meeting.
At the annual meeting, holders of class A common stock will be asked to vote
on proposals to elect three class A directors to serve for a term of one year
and until their successors are elected and qualified. All stockholders will be
asked to vote on a proposal to amend Metromedia Fiber Network's Amended and
Restated Certificate of Incorporation to increase the number of authorized
shares of common stock, par value $.01 per share, from 200,000,000 to
2,926,286,022 consisting of (a) 2,404,031,240 shares of class A common stock and
(b) 522,254,782 shares of class B common stock, to ratify the selection of Ernst
& Young LLP as our independent accountants for the year ending December 31, 1999
and to consider and vote upon any other matters that may properly come before
the annual meeting.
It is important that your shares be represented at the annual meeting,
whether or not you are able to attend. Accordingly, you are urged to sign, date
and mail the enclosed proxy promptly. If you later decide to attend the annual
meeting, you may revoke your proxy and vote in person.
Thank you.
Sincerely,
/s/ Stephen A. Garofalo
--------------------------------------------------------------
Stephen A. Garofalo
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
METROMEDIA FIBER NETWORK, INC.
------------------------
C/O METROMEDIA FIBER NETWORK SERVICES, INC.
ONE NORTH LEXINGTON AVENUE
WHITE PLAINS, NEW YORK 10601
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1999
------------------------
TO THE STOCKHOLDERS OF
METROMEDIA FIBER NETWORK, INC.:
WE HEREBY NOTIFY YOU that we will hold the 1999 annual meeting of
stockholders of Metromedia Fiber Network, Inc., a Delaware corporation, on
Tuesday, May 18, 1999, at 10:00 a.m., Eastern Daylight time, on the Concourse
Level, 1285 Avenue of the Americas, New York, New York.
At the annual meeting, we will ask holders of our class A common stock, par
value $.01 per share, to consider and vote as a separate class upon the election
of three members to Metromedia Fiber Network's board of directors to serve a
one-year term as class A directors (Proposal 1). We will also ask holders of our
class A common stock together with holders of our class B common stock, par
value $.01 per share, to consider and vote as a single class upon the amendment
to our Amended and Restated Certificate of Incorporation to increase the number
of authorized shares of common stock from 200,000,000 shares to 2,926,286,022
shares consisting of (a) 2,404,031,240 shares of class A common stock and (b)
522,254,782 shares of class B common stock (Proposal 2), and the ratification of
the selection of Ernst & Young LLP as our independent accountants for the year
ending December 31, 1999 (Proposal 3), and the transaction of such other
business as may properly come before the annual meeting or any adjournment
thereof. The board of directors is not aware of any other business that will be
presented for consideration at the annual meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" PROPOSALS NO. 1, 2 AND 3 TO BE PRESENTED TO STOCKHOLDERS AT THE ANNUAL
MEETING.
Only stockholders of record at the close of business on March 31, 1999, the
record date, will be entitled to notice of and to vote at the annual meeting or
any adjournment thereof. The annual meeting may be adjourned from time to time
without notice other than by announcement at the annual meeting. A list of
stockholders entitled to vote at the annual meeting will be available for
inspection by any stockholder, for any reason germane to the annual meeting,
during ordinary business hours during the ten days prior to the annual meeting
at the law offices of Paul Weiss Rifkind Wharton & Garrison, LLP, 1285 Avenue of
the Americas, New York, New York 10019. If you wish to view the list of
stockholders, please contact the Secretary's Office at 201-531-8043.
We hope that you will be able to attend the annual meeting in person.
However, whether or not you plan to attend the annual meeting in person, please
complete, sign, date and mail the enclosed proxy in the return envelope to
assure that your shares are represented and voted at the annual meeting. If you
do attend the annual meeting in person, you may revoke your proxy if you wish
and vote your shares in person. Thank you for your cooperation and continued
support.
By Order of the board of directors,
/s/ Arnold. L. Wadler
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Arnold L. Wadler
SECRETARY
White Plains, New York
April 14, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF
THE NUMBER OF SHARES YOU HOLD IN ORDER THAT WE HAVE A QUORUM, WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE MEETING IN PERSON. PLEASE COMPLETE, SIGN, DATE AND
MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING RETURN ENVELOPE (TO WHICH THE SENDER
NEED AFFIX NO POSTAGE IF MAILED WITHIN THE UNITED STATES). IF YOU RECEIVE MORE
THAN ONE PROXY BECAUSE YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR
ADDRESSES, YOU SHOULD SIGN AND RETURN EACH SUCH PROXY TO ASSURE THAT YOU VOTE
ALL OF YOUR SHARES. ALL REGISTERED HOLDERS SHOULD SIGN THE PROXY EXACTLY AS THE
STOCK IS REGISTERED.
METROMEDIA FIBER NETWORK, INC.
------------------------
C/O METROMEDIA FIBER NETWORK SERVICES, INC.
ONE NORTH LEXINGTON AVENUE
WHITE PLAINS, NY 10601
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PROXY STATEMENT
FOR AN ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1999
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We are furnishing this proxy statement to the holders of shares of class A
common stock, par value $0.01 per share, and of class B common stock, par value
$.01 per share, of Metromedia Fiber Network, Inc., a Delaware corporation, in
connection with the solicitation of proxies by our board of directors for use at
our annual meeting of stockholders to be held at 10:00 a.m. Eastern Daylight
time on Tuesday, May 18, 1999 on the Concourse Level, 1285 Avenue of the
Americas, New York, New York, and any adjournments of the meeting. We are
mailing this proxy statement and the accompanying proxy card, along with our
Annual Report on Form 10-K for the year ended December 31, 1998, to the
stockholders of the Company on or about April 16, 1999.
INFORMATION REGARDING THE ANNUAL MEETING
GENERAL. We are furnishing this proxy statement to holders of common stock
in connection with the solicitation of proxies by our board of directors for use
at the annual meeting, and any adjournments thereof. Each copy of this Proxy
Statement being mailed or delivered to our stockholders is accompanied by a
proxy card and the Notice of Annual Meeting of Stockholders. Our Annual Report
to Stockholders and Annual Report on Form 10-K, including financial statements
for the year ended December 31, 1998, accompany but do not constitute part of
this Proxy Statement.
PROPOSALS. We will hold the annual meeting on the Concourse Level at 1285
Avenue of the Americas, New York, New York, on Tuesday, May 18, 1999, beginning
at 10:00 a.m., Eastern Standard Time. At the annual meeting, we will ask holders
of our class A common stock to consider and vote as a separate class upon the
election of three members to our board of directors to serve a one-year term as
class A directors (Proposal 1). We will also ask holders of the class A common
stock together with holders of the class B common stock to consider and vote as
a single class upon an amendment to our Amended and Restated Certificate of
Incorporation increasing the number of authorized shares of our common stock
from 200,000,000 shares to 2,926,286,022 shares consisting of (a) 2,404,031,241
shares of class A common stock and (b) 522,254,782 shares of class B common
stock, (Proposal 2), the ratification of the selection of Ernst & Young LLP as
our independent accountants for the year ending December 31, 1999 (Proposal 3),
and such other matters as may properly come before the annual meeting.
Our board of directors knows of no business that will be presented for
consideration at the annual meeting other than the matters described in this
proxy statement.
PROXIES. The proxies named on the accompanying proxy cards will vote the
shares that are subject to all properly executed proxy cards delivered pursuant
to this solicitation and not revoked at the annual meeting in accordance with
the directions given. In voting by proxy with regard to the election of
directors, you may vote in favor of all nominees, withhold your votes as to all
nominees or withhold your votes as to specific nominees. With regard to other
proposals, you may vote in favor of each proposal or against each proposal, or
in favor of some proposals and against others, or you may abstain from voting on
any or all proposals. You should specify your respective choices on the
accompanying proxy card. If you do not give specific instructions with regard to
the matters to be voted upon, the proxies will vote the shares of class A common
stock represented by a signed proxy card "FOR" Proposal 1 and the shares of
common stock represented by a signed proxy card will be voted "FOR" Proposals 2
and 3, each as listed on the proxy card.
If any other matters properly come before the annual meeting, the proxies will
vote upon such matters according to their judgment.
All proxy cards delivered pursuant to this solicitation are revocable at any
time prior to the annual meeting at the option of the persons executing them by
giving written notice to our corporate Secretary, by delivering a later dated
proxy card or by voting in person at the annual meeting. Attendance at the
annual meeting will not in itself constitute revocation of a proxy. You should
address any written notices of revocation and other communications with respect
to revocations of proxies to: Metromedia Fiber Network, Inc., c/o Metromedia
Company, One Meadowlands Plaza, East Rutherford, New Jersey 07073, Attention:
Arnold L. Wadler, Secretary.
We will initially solicit proxies by mail, but directors, officers and
selected employees may solicit proxies from you personally or by telephone,
facsimile or other forms of communication. Such directors, officers and
employees will not receive any additional compensation for such solicitation. We
also will request brokerage houses, nominees, fiduciaries and other custodians
to forward soliciting materials to beneficial owners, and we will reimburse such
persons for their reasonable expenses incurred in doing so. All expenses
incurred in connection with the solicitation of proxies will be borne by us.
RECORD DATE; QUORUM. Only holders of record of common stock as of the close
of business on March 31, 1999, the record date, will be entitled to notice of
and to vote at the annual meeting. As of the record date, there were 77,742,970
shares of class A common stock outstanding and entitled to vote at the annual
meeting, held by approximately 129 stockholders of record, which number includes
nominees for an undeterminable number of beneficial owners, with each share
entitled to one vote, and 16,884,636 shares of class B common stock outstanding
and entitled to vote at the annual meeting held by three stockholders of record,
with each share entitled to ten votes. The presence, in person or by proxy, of
one-third of the total votes of the outstanding shares of common stock is
necessary to constitute a quorum at the annual meeting. Except with respect to
broker non-votes, the consequences of which are described below, shares of
common stock represented by proxies marked "ABSTAIN" for any proposal presented
at the annual meeting and shares of common stock held by persons in attendance
at the annual meeting who abstain from voting on any such proposal will be
counted for purposes of determining the presence of a quorum but will not be
voted for or against such proposal. Because of the vote required (see below) to
approve the proposals presented at the annual meeting, abstentions will have the
effect of a vote against such proposal (other than Proposal 1). We will consider
shares as to which a broker indicates it has no discretion to vote and which are
not voted as not present at such meeting for purposes of proposals presented at
the annual meeting. Because of the vote required to approve the proposals at the
annual meeting, broker non-votes will have no effect on the outcome of the vote
on any of such proposals. With respect to the election of directors, we will
disregard abstentions and broker non-votes, and they will have no effect on the
vote.
VOTE REQUIRED. The affirmative vote of the holders of a plurality of shares
of class A common stock, voting as a separate class, present in person or
represented by proxy at the annual meeting will be required to elect each of the
class A directors to our board of directors. The affirmative vote of the holders
of a majority of shares of class A common stock and class B common stock, voting
as a single class, present in person or represented by proxy at the annual
meeting, will be required to approve and adopt each of the matters identified in
this proxy statement as being presented to holders of shares of common stock at
the annual meeting, each of which will be voted upon separately at the annual
meeting. In voting on each such matter, holders of class A common stock are
entitled to one vote per share and holders of class B common stock are entitled
to ten votes per share. The three record holders of the outstanding shares of
class B common stock have indicated that they intend to vote in favor of
Proposals 2 and 3, thereby assuring their approval.
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SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides you with certain information, as of March 31,
1999, the record date, regarding the beneficial ownership of our voting stock
after giving effect to our 1998 stock splits by (i) each of our directors and
director nominees, (ii) each person whom we believe beneficially owns more than
5% of our outstanding voting stock, (iii) each named executive officer and (iv)
all our executive officers and directors as a group. In accordance with the
rules promulgated by the Securities and Exchange Commission, such ownership
includes shares currently owned as well as shares which the named person has the
right to acquire beneficial ownership of within 60 days, including through the
exercise of options, warrants or other rights, or through the conversion of a
security. Accordingly, more than one person may be deemed to be a beneficial
owner of the same securities. Except as otherwise indicated, each stockholder
listed below has sole voting and investment power of the shares beneficially
owned by such person.
CLASS A CLASS B
COMMON STOCK COMMON STOCK(1)
------------------------------- -------------------------------
NUMBER PERCENT NUMBER PERCENT PERCENT OF
OF SHARES OF CLASS OF SHARES OF CLASS TOTAL VOTING POWER
----------------- --------- ----------------- --------- ------------------
Stephen A. Garofalo..................... 22,747,756(2) 28.7% -- -- 9.2%
Metromedia Company...................... -- * 15,731,024 93.2% 63.8%(3)
Putnam Investments, Inc................. 14,528,030(4) 18.7% -- -- 5.9%
FMR. Corp............................... 6,672,000(5) 8.6% -- -- 2.7%
Howard M. Finkelstein................... 6,109,000(6) 7.3% -- -- 2.4%
Peter Sahagen........................... 4,416,120(7) 5.8% -- -- 1.7%
Vincent A. Galluccio.................... 715,920(8) * -- -- *
Gerard Benedetto........................ 102,000(9) * -- -- *
Nicholas M. Tanzi....................... 138,440(10) * -- -- *
Silvia Kessel........................... 255,236(11) * -- -- *
John W. Kluge........................... 1,014,000(12) 1.3% 15,731,024(13) 93.2% 63.9%
David Rockefeller....................... 1,414,552(14) 1.8% -- -- *
Stuart Subotnick........................ 1,014,000(12) 1.3% 16,884,636(13) 100.0% 68.6%
Arnold L. Wadler........................ 307,672(11) * -- -- *
Leonard White........................... 23,000(15) * -- -- *
All Directors and Executive Officers as
a Group............................... 33,841,576(16) 43.8% 16,884,636 100.0% 78.7%
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* less than 1.0%
(1) The shares of class B common stock are convertible into shares of class A
common stock at the rate of one share of class A common stock for each share
of class B common stock and the holders of shares of class B common stock
are entitled to 10 votes per share.
(2) Includes presently exercisable options to purchase 1,521,000 shares of class
A common stock at an exercise price of $.49 per share. Mr. Garofalo's
address is One North Lexington Avenue, White Plains, New York 10601.
(3) Metromedia Company's address is One Meadowlands Plaza, East Rutherford, NJ
07073.
(4) Based solely upon the Schedule 13-G, dated February 2, 1999, filed by Putnam
Investments, Inc. The Putnam Investments, Inc. address is One Post Office
Square, Boston, Massachusetts, 02109.
(5) Based solely on the Schedule 13-G, dated February 16, 1999 filed by FMR
Corp., Edward C. Johnson III and Abigail P. Johnson. FMR's address is 82
Devonshire Street, Boston, Massachusetts 02109.
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(6) Includes presently exercisable options to 6,084,000 shares of class A common
stock at an exercise price of $.49 per share and 25,000 shares of class A
common stock owned by members of Mr. Finkelstein's family. Mr. Finkelstein's
address is One North Lexington Avenue, White Plains, New York 10601.
(7) All of such shares are owned by an entity controlled by Mr. Sahagen. Mr.
Sahagen's address is 3590 South Beech Blvd., South Palm Beach, FL 33480.
(8) Represents presently exercisable options to purchase 640,920 and 75,000
shares of class A common stock at an exercise price of $.49 and $4.00 per
share, respectively.
(9) Includes presently exercisable options to purchase 100,000 shares of class A
common stock at an exercise price of $3.88 per share.
(10) Includes presently exercisable options to purchase 60,840 and 75,000 shares
of class A common stock at an exercise price of $1.91 and $4.00 per share,
respectively. Also, includes 2,600 shares of class A common stock owned by
members of Mr. Tanzi's family, with respect to which Mr. Tanzi has been
granted a proxy to vote. Mr. Tanzi's address is One North Lexington Avenue,
White Plains, New York 10601.
(11) Includes 202,800 presently exercisable options to acquire shares of class A
common stock at an exercise price of $.49 per share held by each of Ms.
Kessel and Mr. Wadler. Does not include shares owned by Metromedia Company.
Ms. Kessel and Mr. Wadler are employed by Metromedia Company and disclaim
beneficial ownership of the shares owned by Metromedia Company.
(12) Consists of 1,014,000 presently exercisable options to acquire shares of
class A common stock at an exercise price of $.49 per share held by each of
Mr. Kluge and Mr. Subotnick. Mr. Kluge's address is 215 East 67th Street,
New York, NY 10021 and Mr. Subotnick's address is 215 East 67th Street, New
York, NY 10021.
(13) Includes 15,731,024 shares owned by Metromedia Company. Messrs. Kluge and
Subotnick, Directors of Metromedia Fiber Network, are general partners of
Metromedia Company.
(14) Represents 1,394,552 shares owned by DR & Descendants Partnership, of which
Mr. Rockefeller is a partner and for which he exercises voting and
investment power and presently exercisable options to purchase 20,000
shares of class A common stock at an exercise price of $4.00 per share. Mr.
Rockefeller disclaims actual beneficial ownership of shares owned by DR &
Descendants Partnership except as to shares attributable to his
proportionate interest in the partnership.
(15) Includes 20,000 presently exercisable options to acquire shares of class A
common stock at an exercise price of $4.00 per share.
(16) Includes presently exercisable options to acquire 10,679,520, 60,840,
100,000 and 190,000 shares of class A common stock at an exercise price of
$.49, $1.91, $3.88 and $4.00 per share, respectively.
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DIRECTORS AND OFFICERS
The following table sets forth certain information regarding the directors
and executive officers of Metromedia Fiber Network:
NAME AGE POSITION HELD
- ----------------------------------------------------- --- -----------------------------------------------------
Stephen A. Garofalo.................................. 47 Chairman of the Board and Chief Executive Officer
Howard M. Finkelstein................................ 45 President, Chief Operating Officer and Director
Vincent A. Galluccio................................. 53 Senior Vice President and Director
Gerard Benedetto..................................... 42 Vice President--Chief Financial Officer
Charlotte G. Denenberg............................... 51 Vice President--Chief Technology Officer
Nicholas M. Tanzi.................................... 40 Vice President--Sales
Silvia Kessel........................................ 48 Executive Vice President and Director
John W. Kluge........................................ 84 Director
David Rockefeller.................................... 83 Director
Stuart Subotnick..................................... 56 Director
Arnold L. Wadler..................................... 55 Executive Vice President, General Counsel, Secretary
and Director
Leonard White........................................ 59 Director
DIRECTORS OF METROMEDIA FIBER NETWORK
The board of directors of Metromedia Fiber Network presently consists of
nine members. Holders of the class B common stock are entitled to elect 75% of
the board of directors and holders of the class A common stock are entitled to
vote as a separate class to elect the remaining directors. Currently six of the
nine directors are nominees of the holders of class B common stock and as a
result holders of the class B common stock are entitled to fill three vacancies
on the board of directors. Members of each class of directors will hold office
until their successors are elected and qualified. The directors are elected by a
plurality vote of all votes cast at each annual meeting of stockholders of
Metromedia Fiber Network entitled to vote for such directors. The directors hold
office for a one-year term. The class A directors, whose term expires at the
annual meeting are Howard M. Finkelstein, Stephen A. Garofalo and Vincent A.
Galluccio, and the class B directors are Silvia Kessel, John W. Kluge, David
Rockefeller, Stuart Subotnick, Arnold L. Wadler and Leonard White.
For more information regarding each of Metromedia Fiber Network's directors,
including biographical information, see "PROPOSAL NO. 1 ELECTION OF DIRECTORS."
MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
The board of directors held three regular meetings during 1998. In addition,
the board of directors took action by unanimous written consent three times in
1998. All directors attended at least 75% of the aggregate total number of
meetings of the board of directors and all committees of the board of directors
on which they served except that John W. Kluge attended less than 75% of such
meetings.
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The board of directors has delegated certain functions to the following
standing committees:
THE AUDIT COMMITTEE. The audit committee is responsible for (a) reviewing
the professional services and independence of our independent auditors and the
scope of the annual external audit recommended by the independent auditors, (b)
ensuring that the scope of the annual external audit is sufficiently
comprehensive, (c) reviewing, in consultation with our independent auditors and
our internal auditors, the plan and results of the annual external audit, the
adequacy of our internal control systems and the results of our internal audit
and (d) reviewing with management and our independent auditors our annual
financial statements, financial reporting practices and the results of such
external audit. The audit committee held three regular meetings during 1998 and
took action by unanimous written consent one time during 1998. The current
members of the audit committee are Ms. Silvia Kessel and Messrs. David
Rockefeller and Leonard White.
THE COMPENSATION COMMITTEE. The compensation committee's functions are to
review, approve, recommend and report to the board of directors on matters
specifically relating to the compensation of our executive officers and other
key personnel and to administer our stock option plans. The compensation
committee held one meeting during 1998 and took action by unanimous written
consent ten times during 1998. The current members of the compensation committee
are Messrs. Rockefeller and White.
THE NOMINATING COMMITTEE. The nominating committee's principal function is
to identify candidates and recommend to the board of directors nominees for
membership on the board of directors. The nominating committee expects normally
to be able to identify from its own resources the names of qualified nominees,
but it will accept from stockholders recommendations of individuals to be
considered as nominees, provided our stockholders follow procedures specified in
our by-laws. These procedures provide that, in order to nominate an individual
to the board of directors, a stockholder must provide timely notice of such
nomination in writing to the secretary of Metromedia Fiber Network and a written
statement by the candidate of his or her willingness to serve. The notice must
include the information required to be disclosed in solicitations for proxies
for election of directors pursuant to Regulation 14A under the Exchange Act,
along with the name, record address, class and number of shares of common stock
beneficially owned by the stockholder giving such notice. To be timely, notice
must be received by us not less than 60 days nor more than 90 days prior to the
scheduled date of the annual meeting; provided, however, that if less than 70
days' notice or prior public disclosure of the date of the annual meeting is
given, such notice must be received within 10 days following the earlier of (i)
public disclosure by us of the date of the annual or special meeting at which
directors are to be elected or (ii) the day on which such notice of the date of
the meeting was mailed. For purposes of this notice requirement, disclosure will
be deemed to be first made when disclosure of such date of the annual or special
meeting of stockholders is first made in a press release reported by the Dow
Jones News Service, Associated Press or other comparable national news services,
or in a document which has been publicly filed by us with the Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act. Any such nominations
should be submitted in writing to Metromedia Fiber Network, Inc., One
Meadowlands Plaza, East Rutherford, New Jersey, 07073, Attention: Secretary. The
nominating committee recommends individuals to serve as directors and is
comprised of members who have been elected by the class B stockholders. The
nominating committee did not hold any formal meetings in 1998. The current
members of the nominating committee are Arnold L. Wadler, Vincent A. Galluccio
and Silvia Kessel.
COMPENSATION OF DIRECTORS
During 1998, each director of Metromedia Fiber Network who was not an
officer, employee or affiliate of Metromedia Fiber Network was entitled to
receive a $20,000 annual retainer plus a separate attendance fee of $1,200 for
each meeting of the board of directors attended in person or $500 for each
meeting of the board of directors in which the non-employee director
participated by conference telephone call. Members of committees of the board of
directors are paid $500 for each meeting attended. In
6
addition, our 1997 and 1998 Incentive Stock Plans entitle any non-employee
director who meets the criteria for "outside director" under Section 162(m) of
the Internal Revenue Code ("Independent Directors") and who first serves on the
board of directors after the adoption of the 1997 or 1998 Incentive Stock Plan
to receive awards under such plan of 20,000 shares of class A common stock, each
having an exercise price equal to the fair market value of a share of class A
common stock on the date of grant. Awards to non-employee directors under the
1998 Incentive Stock Plan will be aggregated with awards under the 1997
Incentive Stock Plan so that total awards will not exceed 20,000 shares of class
A common stock. Under the 1997 Incentive Stock Plan, each non-employee director
who was a director on October 28, 1997 was granted an option to purchase 20,000
shares of our class A common stock at an exercise price of $4.00, the price of
the class A common stock on the date of our initial public offering. Options
granted to these non-employee outside directors fully vested and became
exercisable as to all 20,000 shares on the date of grant.
In addition, on August 20, 1997, we granted to each of Mr. Kluge and Mr.
Subotnick options to purchase 1,014,000 shares of class A common stock at an
exercise price of $.49 per share and to each of Mr. Wadler and Ms. Kessel
options to purchase 202,800 shares of class A common stock at an exercise price
of $.49 per share.
EXECUTIVE OFFICERS
Set forth below is the background of each of Metromedia Fiber Network's
executive officers other than those who are also directors (for the backgrounds
of each of Metromedia Fiber Network's directors, including biographical
information, see "PROPOSAL NO. 1 ELECTION OF DIRECTORS" below).
GERARD BENEDETTO has been Vice President-Chief Financial Officer since
February 1998. From July 1995 to January 1998, he was Vice President-Chief
Accounting Officer at Metromedia International Telecommunications, Inc. From
October 1993 to July 1995 he was Vice President-Chief Financial Officer at
Metromedia Restaurant Group. From February 1985 to October 1993, he was Vice
President-Chief Financial Officer at Metromedia Communications Corporation.
CHARLOTTE G. DENENBERG has served as Vice President-Chief Technology Officer
since December 1998. Prior to joining Metromedia Fiber Network, Ms. Denenberg
was employed by Southern New England Telecommunications Corporation ("SNET"),
since 1987 in a variety of positions. Ms. Denenberg held the position of Chief
Technology Officer for SNET from 1994 to November 1998. Before SNET, Ms.
Denenberg was employed by ITT Corporation as Director-Technology Evaluation.
NICHOLAS M. TANZI has been Vice President-Sales since August 1997. From
March 1995 to July 1997, he served as Vice President, Enterprise Networks
Division at Fujitsu Business Communications Systems. From April 1993 to February
1995, Mr. Tanzi was Director of Sales, Eastern Region at Asante Technologies
Inc. Mr. Tanzi was employed in various capacities from November 1979 through
October 1993 at Digital Equipment Corporation.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information on
compensation awarded to, earned by or paid to the Chief Executive Officer and
our four other most highly compensated executive officers whose individual
compensation exceeded $100,000 during the years ended December 31, 1998,
December 31, 1997 and December 31, 1996 for services rendered in all capacities
to us and our subsidiaries. The persons listed in the table below are referred
to as the "named executive officers."
7
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- ---------------------------------
NUMBER OF
SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION STOCK COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(2) ($)
- ---------------------------------------- ---- --------- -------- ------------ ---------------- ------------
Stephen A. Garofalo..................... 1998 328,385 100,000 23,301 -- --
Chairman and Chief 1997 295,000 50,000 14,157 1,521,000(3) --
Executive Officer 1996 225,000 -- -- -- --
Howard M. Finkelstein................... 1998 321,462 100,000 24,074 -- --
President and Chief 1997 196,756 50,000 11,769 6,084,000(5) --
Operating Officer(4) 1996 -- -- -- -- --
Vincent A. Galluccio.................... 1998 183,400 15,000 1,673 150,000(6) --
Senior Vice President 1997 181,522 -- -- 1,240,920(7) --
1996 127,087 -- -- -- --
Gerard Benedetto........................ 1998 181,423 -- 3,355 550,000(9) --
Vice President-Chief 1997 -- -- -- -- --
Financial Officer(8) 1996 -- -- -- -- --
Nicholas M. Tanzi....................... 1998 158,000 65,000 2,819 150,000(6) --
Vice President-Sales(10) 1997 -- -- -- 360,840(11) --
1996 -- -- -- -- --
- ------------------------
(1) Includes amounts paid as automobile allowance, insurance premiums and 401(k)
matching funds.
(2) This information gives effect to our 1998 stock splits.
(3) Includes presently exercisable options to purchase 1,521,000 shares of class
A common stock at an exercise price of $.49 per share.
(4) Officer was hired by Metromedia Fiber Network during 1997, thus preceding
year's compensation is not applicable.
(5) Includes presently exercisable options to purchase 6,084,000 shares of class
A common stock at an exercise price of $.49 per share.
(6) Includes options to purchase 150,000 shares of class A common stock at an
exercise price of $10.50 per share that will become exercisable ratably over
a four year period commencing August 31, 1999.
(7) Includes presently exercisable options to purchase 640,920 shares of class A
common stock at an exercise price of $.49 per share and the options to
purchase 150,000 shares of class A common stock which the officer exercised
during 1998. Also, includes options to purchase 300,000 shares of class A
common stock at an exercise price of $4.00 per share that will become
exercisable ratably over a four year period commencing October 28, 1998.
(8) Officer was hired by Metromedia Fiber Network during 1998, thus preceding
years' compensation is not applicable.
8
(9) Includes options to purchase 400,000 and 150,000 shares of class A common
stock at an exercise price of $3.88 and $10.50 per share that will become
exercisable ratably over a four year period commencing January 6, 1999 and
August 31, 1999, respectively.
(10) Officer was hired by Metromedia Fiber Network during 1997, thus preceding
year's compensation is not applicable. Compensation information for 1997 is
omitted because aggregate compensation during such fiscal year was less
than $100,000.
(11) Includes presently exercisable options to purchase 60,840 shares of class A
common stock at an exercise price of $1.91 per share and options to
purchase 300,000 shares of class A common stock at an exercise price of
$4.00 per share that will become exercisable ratably over a four year
period commencing October 28, 1998.
During 1998 and 1997, Mr. Wadler and Ms. Kessel, each of whom serves as an
executive officer of Metromedia Fiber Network, were employed and paid by
Metromedia Company pursuant to a management agreement with Metromedia Company
dated as of January 2, 1998. Please refer to the section in this proxy statement
entitled "Certain Relationships and Related Transactions-Management Agreement."
We did not pay any other amounts to the named executive officers during 1998 or
1997.
OPTION/SAR GRANTS
DURING THE YEAR ENDED DECEMBER 31, 1998
The following table sets forth individual grants of stock options by us
pursuant to our 1997 and 1998 Incentive Stock Plans or otherwise to the named
executive officers during the fiscal year ended December 31, 1998.
NUMBER OF % OF TOTAL GRANT
SECURITIES GRANTED TO EXERCISE DATE
UNDERLYING EMPLOYEES PRICE EXPIRATION VALUATION
NAME OPTIONS GRANTED (#) IN FISCAL YEAR ($/SH) DATE ($)(1)
- ---------------------------------------------- ------------------- --------------- ----------- ----------- ---------------
Stephen A. Garofalo........................... -- -- -- -- --
Howard M. Finkelstein......................... -- -- -- -- --
Vincent A. Galluccio.......................... 150,000 2.9 10.50 8/31/08 1,083,000
Gerard Benedetto.............................. 400,000 7.8 3.88 1/6/08 1,064,000
150,000 2.9 10.50 8/31/08 1,083,000
Nicholas M. Tanzi............................. 150,000 2.9 10.50 8/31/08 1,083,000
- ------------------------
(1) The modified Black-Scholes method of option valuation has been used to
determine grant date present value. The assumptions used in the
Black-Scholes option valuation calculations are (i) an estimated future
annual stock price volatility of 50%; (ii) a ten-year strip rate of 5.92%;
(iii) a future dividend yield of 0%; and (iv) an expected life of ten years.
9
AGGREGATED OPTION EXERCISES IN 1998
AND FISCAL YEAR-END OPTION AND SAR VALUES
The following table sets forth information concerning the exercise of
options by the named executive officers during the 1998 fiscal year and the
number of unexercised options and SARs beneficially held by such officers as of
the end of the 1998 fiscal year.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES VALUE OPTIONS AND SARS IN THE MONEY OPTIONS/SARS
ACQUIRED REALIZED AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
NAME ON EXERCISE ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ------------------------------- ----------- -------------- ----------------------- --------------------------
Stephen A. Garofalo............ -- -- 1,521,000/0 50,953,500/ -
Howard M. Finkelstein.......... -- -- 6,084,000/0 203,814,000/ -
Vincent A. Gallucio............ 300,000 2,331,631 715,920/375,000 23,983,320/12,562,500
Gerard Benedetto............... -- -- 100,000/450,000 3,350,000/15,075,000
Nicholas M. Tanzi.............. -- -- 135,840/375,000 4,550,640/12,562,500
- ------------------------
(1) Calculated based on a closing price for the class A common stock of $33.50
per share reported by the Nasdaq National Market on December 31, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRADEMARK LICENSE AGREEMENT. We are a party to a license agreement with
Metromedia Company, pursuant to which Metromedia Company has granted us a
nonexclusive, nontransferable, nonassignable right and license, without the
right to grant sublicenses, to use the trade name, trademark and corporate name
Metromedia in the United States and worldwide, royalty-free for a term of 10
years. The license agreement with Metromedia Company can be terminated by
Metromedia Company upon one month's prior written notice in the event that:
(1) Metromedia Company or its affiliates own less than 20% of the common
stock;
(2) a change in control of Metromedia Fiber Network occurs; or
(3) any of the stock or all or substantially all of the assets of any of our
subsidiaries are sold or transferred, in which case, the license
agreement with Metromedia Company will terminate with respect to such
subsidiary.
A change in control of Metromedia Fiber Network is defined as:
- a transaction in which a person or group, within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, not in existence at the
time of the execution of the Metromedia license agreement becomes the
beneficial owner of stock entitling such person or group to exercise 50%
or more of the combined voting power of all classes of our stock;
- a change in the composition of our board of directors whereby a majority
of the members are not directors serving on the board of directors at the
time of the license agreement with Metromedia Company or any person
succeeding such director who was recommended or elected by such directors;
- a reorganization, merger or consolidation where following consummation
thereof, Metromedia Company would hold less than 20% of the combined
voting power of all classes of our stock;
- a sale or other disposition of all or substantially all of our assets; or
- any transaction the result of which would be that the common stock would
not be required to be registered under the Securities Exchange Act of 1934
and the holders of common stock would not
10
receive common stock of the survivor to the transaction which is required
to be registered under the Securities Exchange Act of 1934.
In addition, Metromedia Company has reserved the right to terminate this
trademark license agreement in its entirety immediately upon written notice to
us if, in Metromedia Company's sole judgment, our continued use of Metromedia as
a trade name would jeopardize or be detrimental to the good will and reputation
of Metromedia Company.
We have agreed to indemnify Metromedia Company and hold it harmless against
any and all losses, claims, suits, actions, proceedings, investigations,
judgments, deficiencies, damages, settlements, liabilities and reasonable legal
expenses, and other related expenses, arising in connection with the license
agreement with Metromedia Company.
MANAGEMENT AGREEMENT. We are a party to the management agreement under
which Metromedia Company provides us with consultation and advisory services
relating to legal matters, insurance, personnel and other corporate policies,
cash management, internal audit and finance, taxes, benefit plans and other
services as we may reasonably request. The management agreement terminates on
December 31 of each year, and is automatically renewed for successive one year
terms unless either party terminates upon 60 days prior written notice. We are
also obligated to reimburse Metromedia Company all its out-of-pocket costs and
expenses incurred and advances paid by Metromedia Company in connection with the
management agreement. In this agreement, we have agreed to indemnify Metromedia
Company and hold it harmless from and against any and all damages, liabilities,
losses, claims, actions, suits, proceedings, fees, costs or expenses, including
reasonable attorneys' fees and other costs and expenses incident to any suit,
proceeding or investigation of any kind imposed on, incurred by or asserted
against Metromedia Company in connection with the management agreement. In 1997,
Metromedia Company received no money for its out-of-pocket costs and expenses or
for interest on advances extended by it to us under the management agreement.
For the year ended December 31, 1998, we incurred $500,000 to Metromedia Company
under this agreement.
STOCK SPLITS. On July 23, 1998, the executive committee of the board of
directors approved a two-for-one stock split of the shares of class A common
stock and class B common stock in the form of a 100% stock dividend. The stock
dividend was issued to stockholders of record as of the close of business on
August 7, 1998. The stock dividend was issued to stockholders on August 28,
1998. As of September 30, 1998, adjusted for the effect of such stock split, we
had 38,730,226 shares of class A common stock outstanding and 8,442,318 shares
of class B common stock outstanding. On December 3, 1998, the executive
committee of the board of directors approved a two-for-one stock split of the
shares of class A common stock and class B common stock in the form of a 100%
stock dividend. The stock dividend was issued to stockholders of record as of
the close of business on December 8, 1998. The stock dividend was issued to
stockholders on December 22, 1998. As of March 31, 1999, adjusted for the effect
of the stock splits, we had 77,742,970 shares of class A common stock
outstanding and 16,884,636 shares of class B common stock outstanding. Subject
to approval by our stockholders a portion of the shares newly authorized
pursuant to Proposal No. 2 will be used for the two-for-one stock split approved
by the executive committee of the board of directors on April 12, 1999. The
stock split will be in the form of a 100% stock dividend and will be payable to
holders of shares of class A common stock and class B common stock at the close
of business on May 3, 1999. The payment date of the stock split will be on or
about May 19, 1999. The share and per share amounts set forth in this proxy
statement have not been adjusted to reflect this stock split.
11
CERTAIN AGREEMENTS REGARDING EMPLOYMENT
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with each of the following named
executive officers.
GAROFALO EMPLOYMENT AGREEMENT. Mr. Garofalo's employment agreement, dated as
of February 26, 1997, has a five-year term. It provides Mr. Garofalo a base
salary of $295,000 for the first year, $335,000 for the second year, $375,000
for the third year, $415,000 for the fourth year and $455,000 for the fifth
year. Mr. Garofalo is also entitled to receive an annual incentive bonus to be
determined by the compensation committee of the board of directors. The
incentive bonus will not be less than $100,000 per year. Mr. Garofalo's
employment agreement also provides for other employee benefits such as a car
allowance, life insurance, health care and certain disability and death
benefits. In addition, Mr. Garofalo was granted options to purchase 1,521,000
shares of class A common stock at an exercise price of $.49 per share. These
options are immediately exercisable and expire 10 years from their grant. We
registered the shares of class A common stock underlying the options under the
Securities Act upon the consummation of our initial public offering.
Except in the case of disability, we may terminate Mr. Garofalo's employment
only for cause upon which termination Mr. Garofalo will have no right to receive
any compensation or benefit from us. If the agreement is terminated without
cause, or if Mr. Garofalo terminates employment for good reason, we will be
obligated to pay Mr. Garofalo an amount equal to the greater of:
- his monthly base salary as then in effect multiplied by the number of
months remaining in the term of his employment as of such termination date
and
- $1,000,000.
Good reason includes:
- a reduction in the nature or scope of Mr. Garofalo's titles, authorities,
powers, duties or responsibilities;
- a change in the method or formula for determining the bonus which results
in a decrease in the amount of bonus payable to Mr. Garofalo;
- the removal of Mr. Garofalo as a member of the board of directors, unless
such removal occurs after termination of Mr. Garofalo's employment for
cause;
- a sale of all or substantially all of the ownership interests or assets of
Metromedia Fiber Network or a merger or consolidation of Metromedia Fiber
Network with any other corporation;
- a change in control of Metromedia Fiber Network, defined as any person or
entity becoming a beneficial owner as defined in Rule 13d-3 of the
Securities Exchange Act of 1934 directly or indirectly of our securities
representing 50% or more of the combined voting power of our then
outstanding securities; or
- a material breach by us of our affirmative or negative covenants or
undertakings in the employment agreement and a failure to remedy such
breach within 15 days.
Mr. Garofalo has agreed not to compete with us for a period of one year
following termination of his employment agreement. During this non-compete
period, Mr. Garofalo will be entitled to receive an amount equal to his base
salary as in effect on the date of termination so long as the agreement was not
terminated prior to the expiration of the term by either party.
FINKELSTEIN EMPLOYMENT AGREEMENT. Mr. Finkelstein's employment agreement,
dated as of April 30, 1997, has a three year term. It provides Mr. Finkelstein
with a base salary of $295,000 for the first year, $335,000 for the second year
and $375,000 for the third year. Mr. Finkelstein is also entitled to
12
receive an annual incentive bonus to be determined by the compensation committee
of the board of directors. The incentive bonus will not be less than $100,000
for each year. Mr. Finkelstein's employment agreement also provides for other
employee benefits such as a car allowance, life insurance, health care, and
certain disability and death benefits. In addition, Mr. Finkelstein was granted
options to purchase 6,084,000 shares of class A common stock at an exercise
price of $.49 per share, which options are immediately exercisable and expire 10
years from their grant. We registered such shares of class A common stock under
the Securities Act on Form S-8 upon the consummation of our initial public
offering.
Except in the case of disability, we may terminate Mr. Finkelstein's
employment only for cause upon which termination Mr. Finkelstein will have no
right to receive any compensation or benefit from us. If the agreement is
terminated without cause or if Mr. Finkelstein terminates employment for good
reason, we will be obligated to pay to Mr. Finkelstein his base salary, bonus
and benefits that are accrued and unpaid as of the date of termination as well
as an amount equal to one and a half times his base salary as then in effect.
Good reason includes:
- a reduction in the nature or scope of Mr. Finkelstein's titles,
authorities, powers, duties or responsibilities;
- a change in the method or formula for determining the bonus which results
in a decrease in the amount of bonus payable to Mr. Finkelstein;
- the removal of Mr. Finkelstein as a member of the board of directors,
unless such removal occurs after termination of Mr. Finkelstein's
employment for cause;
- a sale of all or substantially all of the ownership interests or assets of
Metromedia Fiber Network or a merger or consolidation of Metromedia Fiber
Network with any other corporation;
- a change in control of Metromedia Fiber Network, defined as any person or
entity, other than Mr. Garofalo, becoming a beneficial owner as defined in
Rule 13d-3 of the Securities Exchange Act of 1934 directly or indirectly
of our securities representing 50% or more of the combined voting power of
our then outstanding securities; or
- a material breach by us of our affirmative or negative covenants or
undertakings in the employment agreement and a failure to remedy such
breach within 15 days.
Mr. Finkelstein has agreed not to compete with us for a period of one year
following termination of his employment agreement. During this non-compete
period, Mr. Finkelstein will be entitled to receive an amount equal to his base
salary as in effect on the date of termination so long as the agreement was not
terminated prior to the expiration of the term by either party.
GALLUCCIO EMPLOYMENT AGREEMENT. Mr. Galluccio's employment agreement, dated
as of August 31, 1998, has a one year term. It provides Mr. Galluccio with a
base salary of $183,400. Mr. Galluccio is also entitled to receive an annual
incentive bonus, which is dependent upon our performance, to be determined by
the compensation committee of the board of directors. If approved by the
compensation committee, the incentive bonus has a target of 20% of Mr.
Galluccio's base salary. Mr. Galluccio's employment agreement also provides for
other employee benefits such as the right to participate in all group health and
insurance programs. In addition, Mr. Galluccio was granted options to purchase
150,000 shares of class A common stock at an exercise price of $10.50 per share.
These shares have been registered under the Securities Act on Form S-8.
Except in the case of disability or a change of control, we may terminate
Mr. Galluccio's employment only for cause upon which termination Mr. Galluccio
will have no right to receive any compensation or benefit from us. If Mr.
Galluccio's employment is terminated for any reason other than for cause or in
the event that there is a change of control of Metromedia Fiber Network and Mr.
Galluccio is requested in
13
connection with such change of control to perform his duties under this
agreement on a regular, full-time basis at a location further than 75 miles from
Mr. Galluccio's current principal office location, Mr. Galluccio, in his sole
and absolute discretion, may deem this agreement to be terminated by us without
cause. Upon such termination, Mr. Galluccio will be entitled to receive his base
salary for the remaining term of his employment agreement, all previously earned
and accrued entitlements and benefits from us and our employee benefit plans and
an amount equal to 25% of Mr. Galluccio's base salary. Mr. Galluccio has agreed
not to compete with us or any affiliated company for a period of two years
following the termination of his employment agreement.
BENEDETTO EMPLOYMENT AGREEMENT. Mr. Benedetto's employment agreement, dated
as of August 31, 1998, has a three and one-half year term. It provides Mr.
Benedetto with a minimum base salary of $200,000 for each year. Mr. Benedetto is
also entitled to receive an annual incentive bonus, which is dependent upon our
performance, to be determined by the compensation committee of the board of
directors. If approved by the compensation committee, the incentive bonus has a
target of 20% of Mr. Benedetto's base salary. Mr. Benedetto's employment
agreement also provides for other employee benefits such as the right to
participate in all group health and insurance programs. In addition, Mr.
Benedetto was granted options to purchase 150,000 shares of class A common stock
at an exercise price of $10.50 per share. These shares have been registered
under the Securities Act on Form S-8.
Except in the case of disability or a change of control, we may terminate
Mr. Benedetto's employment only for cause upon which termination Mr. Benedetto
will have no right to receive any compensation or benefit from us. If Mr.
Benedetto's employment is terminated for any reason other than for cause or in
the event that there is a change of control of Metromedia Fiber Network and Mr.
Benedetto is requested in connection with such change of control to perform his
duties under this agreement on a regular, full-time basis at a location further
than 75 miles from Mr. Benedetto's current principal office location, Mr.
Benedetto, in his sole and absolute discretion, may deem this agreement to be
terminated by us without cause. Upon such termination, Mr. Benedetto will be
entitled to receive his base salary for the remaining term of his employment
agreement, all previously earned and accrued entitlements and benefits from us
and our employee benefit plans and an amount equal to 25% of Mr. Benedetto's
base salary. Mr. Benedetto has agreed not to compete with us or any affiliated
company for a period of two years following termination of his employment
agreement.
TANZI EMPLOYMENT AGREEMENT. Mr. Tanzi's employment agreement, dated as of
August 31, 1998, has a two year term. It provides Mr. Tanzi with a minimum base
salary of $175,000 for each year. Mr. Tanzi is also entitled to receive an
annual incentive bonus, which is dependent upon our performance, to be
determined by the compensation committee of the board of directors. If approved
by the compensation committee, the incentive bonus has a target of 40% of Mr.
Tanzi's base salary. Mr. Tanzi's employment agreement also provides for other
employee benefits such as the right to participate in all group health and
insurance programs. In addition, Mr. Tanzi was granted options to purchase
150,000 shares of class A common stock at an exercise price of $10.50 per share.
These shares have been registered under the Securities Act on Form S-8.
Except in the case of disability or change of control, we may terminate Mr.
Tanzi's employment only for cause upon which termination Mr. Tanzi will have no
right to receive any compensation or benefit from us. If Mr. Tanzi's employment
is terminated for any reason other than for cause or in the event that there is
a change of control of Metromedia Fiber Network and Mr. Tanzi is requested in
connection with such change of control to perform his duties under this
agreement on a regular, full-time basis at a location further than 75 miles from
Mr. Tanzi's current principal office location, Mr. Tanzi, in his sole and
absolute discretion, may deem this agreement to be terminated by us without
cause. Upon such termination, Mr. Tanzi will be entitled to receive his base
salary for the remaining term of his employment agreement, all previously earned
and accrued entitlements and benefits from us and our employee benefit plans and
an amount equal to 25% of Mr. Tanzi's base salary. Mr. Tanzi has agreed not to
compete with us or any affiliated company for a period of two years following
termination of his employment agreement.
14
1997 AND 1998 INCENTIVE STOCK PLANS
Metromedia Fiber Network has adopted the 1997 Incentive Stock Plan and the
1998 Incentive Stock Plan pursuant to which key employees, officers and
directors (including independent directors and members of the compensation
committee) of Metromedia Fiber Network and its subsidiaries who have substantial
responsibility in the direction of Metromedia Fiber Network and its
subsidiaries, and others whom the option committee determines provide
substantial and important services to the company may be granted (i) incentive
stock options ("ISOs") and/or (ii) non-qualified stock options ("NQSOs" and
together with ISOs, "Stock Options"). The aggregate number of shares of the
class A common stock that may be the subject of Stock Options under the
Incentive Stock Plans is 14,000,000 (4,000,000 under the 1997 Incentive Stock
Plan and 10,000,000 under the 1998 Incentive Stock Plan) and the maximum number
of shares of class A common stock available with respect to Stock Options
granted to any one grantee is 1,000,000 (400,000 under the 1997 Incentive Stock
Plan and 600,000 under the 1998 Incentive Stock Plan) shares.
The exercise price of all ISOs is the fair market value of the class A
common stock on the date of grant (or 110% of such fair market value with
respect to ISOs granted to persons who own stock possessing more than 10% of the
voting rights of Metromedia Fiber Network's capital stock) and the exercise
price of all NQSOs is determined by the Compensation Committee, although the
initial awards will be made at fair market value of the class A common stock on
the date of grant. Stock Options vest and become exercisable over a period of
years, as determined by the Compensation Committee, and have a term not to
exceed ten years.
If a grantee's employment with us is terminated because of the grantee's
death, or the grantee's retirement on or after attaining the age which the
company may from time to time establish as the retirement age for any class of
its employees or the age specified in the employment agreement with such grantee
prior to the date when the Stock Option is by its terms exercisable, the Stock
Option will be immediately exercisable as of the date of the termination of the
grantee's employment, subject to the other terms of the Incentive Stock Plans.
Upon a "change in control" of Metromedia Fiber Network (as defined in the
Incentive Stock Plans) each holder of a Stock Option will have the right to
exercise the Stock Option in full without regard to any waiting period,
installment period or other limitation or restriction thereon and the right,
exercisable by written notice within 60 days after the change in control, to
receive in exchange for the surrender of an option an amount of cash equal to
the difference between the fair market value of the class A common stock on the
date of exercise and the exercise price of the Stock Option. For options granted
under the 1998 Incentive Stock Plan on or after November 13, 1998, in the event
of a change in control, the board of directors may in its sole discretion
determine (i) that each holder of such a Stock Option will have the right to
exercise the Stock Option in full without regard to any waiting period,
installment period or other limitation or restriction thereon, and/or (ii) each
holder of such a Stock Option will have the right, exercisable by written notice
within 60 days after the change of control, to receive in exchange for the
surrender of a Stock Option an amount of cash equal to the difference between
the fair market value of the Class A Common Stock on the date of exercise and
the exercise price of the Stock Option. Alternatively, the board of directors
may in its sole discretion determine to take neither action. Upon a grantee's
termination of employment from Metromedia Fiber Network or a subsidiary on
account of disability, the grantee or the legal representative of the grantee
will have the right for a period of one year following the date of such
termination to exercise a Stock Option to the extent such award is exercisable
and to the extent such Stock Option has not yet expired. In the event the
grantee's employment with us is terminated for any reason other than disability,
death or retirement, the grantee may exercise a Stock Option within three months
after his or her termination of employment.
15
INDEMNIFICATION AGREEMENTS
We have entered into indemnification agreements with certain officers and
directors. The indemnification agreements provide for indemnification of such
directors and officers to the fullest extent authorized or permitted by law. The
indemnification agreements also provide that
(1) we will advance all expenses incurred by the director or officer in
defending certain litigation,
(2) we will appoint in specified circumstances an independent legal counsel
to determine whether the director or officer is entitled to
indemnification and
(3) we will continue to maintain directors' and officers' liability
insurance, which currently consists of $25.0 million of primary coverage.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who beneficially own more than 10% of any class of our
outstanding common stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of the common
stock. Such officers, directors and greater than 10% stockholders are required
by the regulations of the Securities and Exchange Commission to furnish us with
copies of all reports that they file under Section 16(a). To our knowledge,
based solely on a review of the copies of such reports furnished to us and
written representations that no other reports were required, all Section 16(a)
filing requirements applicable to our officers, directors and greater than 10%
beneficial owners were complied with by such persons during the fiscal year
ended December 31, 1998, except Vincent A. Galluccio inadvertently failed to
file, when due, a Form 4 relating to one transaction during the fiscal year
ended December 31, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee consists of Messrs. Rockefeller and White.
Neither member of the compensation committee served as an officer or employee of
Metromedia Fiber Network or any of its subsidiaries during fiscal 1998. There
were no material transactions between us and any of the members of the
compensation committee during fiscal 1998.
COMPENSATION COMMITTEE REPORT ON COMPENSATION
The compensation committee of the board of directors is comprised entirely
of independent directors and is responsible for developing and making
recommendations to the board with respect to our executive compensation
policies.
The following report of the compensation committee discusses our executive
compensation policies and the basis of the compensation paid to our executive
officers in 1998.
In general, the compensation committee seeks to link the compensation paid
to each executive officer to the performance of such executive officer. Within
these parameters, the executive compensation program attempts to provide an
overall level of executive compensation that is competitive with companies of
comparable size and with similar market and operating characteristics.
There are three elements in our executive total compensation program, all
determined by individual and corporate performance as specified in the various
employment agreements:
- Base salary
- Annual incentive
- Long-term incentive
16
BASE SALARY
The Summary Compensation Table shows amounts earned during 1998 by our
executive officers. The base compensation of such executive officers is set by
the terms of the employment agreement entered into with each such executive
officer. We established base salaries prior to our initial public offering in
1997 for Mr. Garofalo's and Mr. Finkelstein's executive employment agreements.
We established the base salaries for the other executive employment agreements
in August of 1998.
ANNUAL INCENTIVES
Each executive officer is entitled to an annual incentive bonus as
determined by the compensation committee. The cash bonuses awarded to our chief
executive officer and president in 1998 were determined based on provisions of
their employment agreements. The cash bonuses awarded to our senior vice
president and vice president--sales were determined by management and approved
by the Compensation Committee.
LONG-TERM INCENTIVES
We grant long-term incentive awards to align a significant portion of the
executive compensation program with shareholder interests. Executives are
eligible to participate in the 1997 and 1998 Incentive Stock Plans. On January
6, 1998 the compensation committee approved and we granted to the vice
president-chief financial officer stock options to purchase 400,000 shares of
class A common stock at an exercise price of $3.88, which was the fair market
value of such shares on the date of grant. Also, on August 31, 1998 the
compensation committee approved and we granted to each of the senior vice
president, vice president-chief financial officer and vice president-sales stock
options to purchase 150,000 shares of class A common stock at an exercise price
of $10.50 per share, which was the fair market value of such shares of class A
common stock on the date of grant.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Summary Compensation Table shows
amounts earned during 1998 by our Chairman and Chief Executive Officer, Stephen
A. Garofalo. Mr. Garofalo's employment agreement sets his base compensation. The
compensation committee may adjust his respective annual incentive bonus
(although to not less than $100,000) based on an assessment of his past
performance, increases in our revenue and market penetration and improvements in
operating efficiencies.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). One of the factors
the compensation committee considers in connection with compensation matters is
the anticipated tax treatment to us and to the executives of the compensation
arrangements. The deductibility of certain types of compensation depends upon
the timing of an executive's vesting in, or exercise of, previously granted
rights. Moreover, interpretation of, and changes in, the tax laws and other
factors beyond the compensation committee's control also affect the
deductibility of compensation. Accordingly, the compensation committee will not
necessarily limit executive compensation to that deductible under Section 162(m)
of the Code. The compensation committee will consider various alternatives to
preserving the deductibility of compensation payments and benefits to the extent
consistent with its other compensation objectives.
The foregoing report of the compensation committee shall not be deemed to be
incorporated by reference into any filing of Metromedia Fiber Network under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that we specifically incorporate such information
by reference, and shall not otherwise be deemed filed under such Acts.
Submitted by the Compensation Committee
of Metromedia Fiber Network, Inc.'s board
of directors
as of March 30, 1999
David Rockefeller
Leonard White
17
PERFORMANCE GRAPH
The following graph sets forth the total stockholder return on our class A
common stock as compared to the Nasdaq Stock Market Composite Index, a broad
based capitalization-weighted index of all NASDAQ National Market and Smallcap
Stocks, and the NASDAQ Telecommunications Stock Index, a capitalization-weighted
index designed to measure the performance of all NASDAQ stocks in the
telecommunications sector, for the period commencing on October 29, 1997 and
ending December 31, 1998. The total stockholder return assumes $100 invested
October 29, 1997 in Metromedia Fiber Network's Class A Common Stock, the Nasdaq
Stock Market Composite Index and the NASDAQ Telecommunications Stock Index.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
METROMEDIA FIBER NETWORK, INC., NASDAQ STOCK MARKET COMPOSITE
INDEX AND NASDAQ TELECOMMUNICATIONS STOCK INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
10/29/97 12/31/97 12/31/98
Metromedia Fiber Network, Inc. 100 104 627
NASDAQ Composite Index 100 98 137
NASDAQ Telecomm Index 100 104 170
OCTOBER 29, 1997 DECEMBER 31, 1997 DECEMBER 31, 1998
------------------- --------------------- ---------------------
Metromedia Fiber Network, Inc............................. 100 104 627
NASDAQ Stock Market Composite Index....................... 100 98 137
NASDAQ Telecommunications Stock Index..................... 100 104 170
- ------------------------
* Total return assumes $100 investment on October 29, 1997 in Metromedia Fiber
Network, Inc. and select indices, and reinvestment of dividends.
18
PROPOSAL NO. 1 ELECTION OF CLASS A DIRECTORS
The following table sets forth certain information with respect to the
members of our board of directors, including the incumbent directors (Messrs.
Finkelstein, Garofalo and Galluccio) who have been nominated by the board of
directors for re-election as class A directors at the annual meeting.
The board of directors knows of no reason why any of its nominees will be
unable or will refuse to accept election. If any nominee becomes unable or
refuses to accept election, the board of directors will either reduce the number
of directors to be elected or select a substitute nominee. If a substitute
nominee is selected, proxies will be voted in favor of such nominee.
The affirmative vote of the holders of a plurality of shares of class A
common stock present in person or represented by proxy at the annual meeting
will be required to elect each of the three class A directors to Metromedia
Fiber Network's board.
CLASS OF DIRECTOR
NAME, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS AGE DIRECTORS SINCE
- -------------------------------------------------------------------------------------- --- ---------- -----------
Stephen A. Garofalo................................................................... 47 Class A 1993
Mr. Garofalo founded Metromedia Fiber Network in April 1993, has been serving as
chairman of the board since our inception and as chief executive officer since
October 1996 and served as president from 1993 to 1996 and as secretary from 1993 to
1997. From 1979 to 1993 Mr. Garofalo served as president and chief executive officer
of F. Garofalo Electric Co., Inc., an electrical contractor.
Howard M. Finkelstein................................................................. 45 Class A 1997
Mr. Finkelstein has been our president, chief operating officer and a director since
April 1997. Prior to joining Metromedia Fiber Network, Mr. Finkelstein was employed
by various affiliates of Metromedia Company and its predecessor for 16 years. His
most recent position was as executive vice president and chief operating officer of
Metromedia International Telecommunications, Inc. From 1984 to 1993, Mr. Finkelstein
served as president of Metromedia Communications Corporation, a national long
distance telecommunications carrier. In addition, Mr. Finkelstein served as
executive vice president and chief operating officer of Metromedia Restaurant Group
from 1993 to 1995. Mr. Finkelstein is a director of Multimedia Medical Systems,
Incorporated, a privately held company.
Vincent A. Galluccio.................................................................. 53 Class A 1997
Mr. Galluccio has been a director of the Company since February 1997 and had served
as president of our International Optical Network joint venture during 1998 and as a
senior vice president since December 1995. From January 1992 to October 1994, Mr.
Galluccio was employed by British Telecommunications plc as a global sales manager
for network outsourcing operations. Prior to joining British Telecommunications plc
Mr. Galluccio spent 25 years with International Business Machines Corporation in
various sales, marketing and business development positions and was involved in both
domestic and world trade assignments.
19
CLASS OF DIRECTOR
NAME, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS AGE DIRECTORS SINCE
- -------------------------------------------------------------------------------------- --- ---------- -----------
Silvia Kessel......................................................................... 48 Class B 1997
Ms. Kessel has served as a director of Metromedia Fiber Network since July 1997 and
as executive vice president since October 1997. Ms. Kessel has served as chief
financial officer and treasurer of Metromedia International Group, Inc. since 1995
and executive vice president of Metromedia International Group since 1996. In
addition, Ms. Kessel served as executive vice president of Orion Pictures
Corporation, a motion picture production and distribution company, from January 1993
through July 1997, senior vice president of Metromedia since 1994 and president of
Kluge & Company since January 1994. Prior to that time, Ms. Kessel served as senior
vice president and a director of Orion from June 1991 to November 1992 and managing
director of Kluge & Company from April 1990 to January 1994. Ms. Kessel is executive
vice president and a member of the board of directors of Big City Radio, Inc., an
American Stock Exchange listed company that operates radio stations in New York, Los
Angeles and Chicago, and of Metromedia International Group.
John W. Kluge......................................................................... 84 Class B 1997
Mr. Kluge has been a director of Metromedia Fiber Network the Company since July
1997. Mr. Kluge has been the President and Chairman of Metromedia Company and its
predecessor-in-interest, Metromedia, Inc. for over five years. Mr. Kluge has been
the chairman of the board of Metromedia International Group since 1995. In addition,
Mr. Kluge was chairman of the board and a director of Orion from 1992 until July
1997. He also serves as a director of Conair Corporation and Occidental Petroleum
Corporation.
Stuart Subotnick...................................................................... 56 Class B 1997
Mr. Subotnick has been a director of Metromedia Fiber Network since July 1997. Mr.
Subotnick has been the vice chairman of the board of Metromedia International Group
since 1995 and president and chief executive officer of Metromedia International
Group since December 1996. In addition, Mr. Subotnick served as vice chairman of the
board of Orion from 1992 until July 1997. Mr. Subotnick has served as executive vice
president of Metromedia Company, its predecessor-in-interest, Metromedia, Inc., and
Metromedia International Group for over five years. Mr. Subotnick is also a director
of Carnival Cruise Lines, Inc. and chairman of the board of Big City Radio.
20
CLASS OF DIRECTOR
NAME, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS AGE DIRECTORS SINCE
- -------------------------------------------------------------------------------------- --- ---------- -----------
David Rockefeller..................................................................... 83 Class B 1997
Mr. Rockefeller has served as a director of Metromedia Fiber Network since October
1997. He currently serves as chairman of The Chase Manhattan Bank's International
Advisory Committee, as chairman of Rockefeller Center Properties, Inc. (since 1995)
and as a Director of Rockefeller & Co., Inc. (since 1994), a privately owned
investment management firm and its parent corporation, Rockefeller Financial
Services, Inc. From 1961 to 1981, Mr. Rockefeller served as chairman of The Chase
Manhattan Corporation and The Chase Manhattan Bank, N.A. From 1981 to 1995, he
served as chairman of Rockefeller Group, Inc.
Arnold L. Wadler...................................................................... 55 Class B 1997
Mr. Wadler has served executive vice president, general counsel and secretary of
Metromedia Fiber Network since October 1997 and has served as a director of
Metromedia Fiber Network since July 1997. Mr. Wadler has served as executive vice
president, general counsel and secretary of Metromedia International Group since
August 29, 1996 and, from November 1, 1995 until that date, as senior vice
president, general counsel and secretary of Metromedia International Group and as
the executive vice president, general counsel, secretary and director of Big City
Radio since December 1997. In addition, Mr. Wadler serves as a director of
Metromedia International Group and served as a Director of Orion from 1991 until
July 1997 and as senior vice president, secretary and general counsel of Metromedia
Company, and its predecessor-in-interest, Metromedia, Inc., for over five years.
Leonard White......................................................................... 59 Class B 1997
Mr. White has served as a director of Metromedia Fiber Network since October 1997.
Mr. White has served as President and chief executive officer of Rigel Enterprises
since July 1997. Mr. White served as President and Chief Executive Officer of Orion,
Inc. from 1992 until 1997 and as President and Chief Executive Officer of Orion Home
Entertainment Corporation from 1987 to 1992. Mr. White also serves as a director of
Metromedia International Group, Big City Radio and American Film Technologies, Inc.
THE BOARD OF DIRECTORS RECOMMENDS THAT HOLDERS OF CLASS A COMMON STOCK VOTE
"FOR" THE ELECTION OF MESSRS. FINKELSTEIN, GAROFALO, AND GALLUCCIO AS CLASS A
DIRECTORS OF METROMEDIA FIBER NETWORK.
21
PROPOSAL NO. 2--THE CHARTER AMENDMENT
On March 30, 1999, the board of directors approved an amendment to Article
THIRD, Section 4.1 of Metromedia Fiber Network's Amended and Restated
Certificate of Incorporation to increase the authorized number of shares of our
capital stock to 2,946,286,022 shares consisting of (a) 2,404,031,240 shares of
class A common stock, (b) 522,254,782 shares of class B common stock, and (c)
20,000,000 shares of preferred stock, subject to stockholder approval. The
following summary description of the charter amendment is qualified in its
entirety by the text thereof contained in Appendix A hereto.
As of March 31, 1999, we have authorized 220,000,000 shares of capital
stock, consisting of (i) 180,000,000 shares of class A common stock, of which
77,742,970 are issued and outstanding, (ii) 20,000,000 shares of class B common
stock, of which 16,884,636 are issued and outstanding and (iii) 20,000,000
shares of preferred stock, none of which are issued and outstanding. The board
of directors believes it is desirable to have additional shares of class A
common stock and class B common stock available for future financings, potential
acquisitions and the payment of stock dividends. Having shares of common stock
available for issuance provides us with greater flexibility should opportunities
arise that require prompt action as it will allow such shares to be issued
without the delay and expense of obtaining stockholder approval at the time,
which could otherwise deprive us and our stockholders of the ability to
effectively benefit from the opportunity. In addition, our board of directors
could consider the issuance of common stock as a means of protecting our
stockholders in the face of a proposal relating to a change in control that the
board determined was not in the best interests of us and our stockholders.
Subject to approval by our stockholders a portion of the shares newly
authorized pursuant to Proposal No. 2 will be used for the two-for-one stock
split approved by the executive committee of the board of directors on April 12,
1999. The stock split will be in the form of a 100% stock dividend and will be
payable to holders of record of shares of Class A common stock and Class B
common stock at the close of business on May 3, 1999. The payment date of the
stock split will be on or about May 19, 1999. The share and per share amounts
set forth in this proxy statement have not been adjusted to reflect this stock
split. We currently have no other specific plans for the use of such shares.
The charter amendment is not intended to have an anti-takeover effect.
However, as a result of the increase in the number of shares of authorized
common stock, the board of directors could, with certain restrictions, issue
additional shares of common stock without any further stockholder action. The
issuance of such shares of common stock could be used as an anti-takeover
device. Accordingly, the charter amendment may have an anti-takeover effect.
Approval by the affirmative vote of the holders of our class A common stock
and class B common stock having a majority of the votes of all such outstanding
shares of common stock is required for approval of the charter amendment. Each
share of class A common stock entitles the holder to one vote, and each share of
class B common stock entitles the holder to ten votes. The holders of class B
common stock have informed us of their intent to vote in favor of the charter
amendment, thereby ensuring its approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL
TO APPROVE THE CHARTER AMENDMENT.
22
PROPOSAL NO. 3 RATIFICATION OF
THE APPOINTMENT OF INDEPENDENT AUDITORS
The board of directors has appointed the firm of Ernst & Young LLP,
independent auditors, to audit our consolidated financial statements for the
year ending December 31, 1999, subject to ratification by our Stockholders.
A partner of Ernst & Young LLP is expected to be present at the annual
meeting and to be provided with an opportunity to make a statement if such
partner desires to do so and to be available to respond to appropriate questions
from stockholders.
If the stockholders do not ratify the appointment Ernst & Young LLP as
independent auditors for the forthcoming fiscal year, such appointment will be
reconsidered by the audit committee and the board of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS OF OUR
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDING DECEMBER 31, 1999.
23
ANNUAL REPORT; INCORPORATION BY REFERENCE
We our mailing our annual report on Form 10-K for the fiscal year ended
December 31, 1998 (which contains our audited consolidated financial statements)
to stockholders together with this proxy statement. To the extent this proxy
statement has been or will be specifically incorporated by reference into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, the sections of the proxy statement entitled
"Compensation Committee Report on Compensation" and "Performance Graph" shall
not be deemed to be so incorporated unless specifically otherwise provided in
any such filing.
Upon the oral or written request of any stockholder of record on the record
date, we will supply a copy of the Company's annual report on Form 10-K for the
year ended December 31, 1998 (excluding exhibits), as filed with the Commission,
without charge. You should direct requests to Metromedia Fiber Network, Inc.,
One Meadowlands Plaza, East Rutherford, New Jersey 07073, Attention: Secretary.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Any stockholder who wishes to present a proposal at the 2000 annual meeting
of stockholders, and who wishes to have such proposal included in our proxy
statement for that meeting, must deliver a copy of such proposal to Metromedia
Fiber Network, One Meadowlands Plaza, East Rutherford, New Jersey 07073,
Attention: Secretary, no later than December 10, 1999; provided, however, that
if the 2000 annual meeting of stockholders is held on a date more than 30 days
before or after the corresponding date of the 1999 annual meeting of
stockholders, any stockholder who wishes to have a proposal included in our
proxy statement for that meeting must deliver a copy of the proposal to us a
reasonable time before the proxy solicitation is made. We reserve the right to
decline to include in our proxy statement any stockholder's proposal, which does
not comply with the rules of the Securities and Exchange Commission for
inclusion therein.
OTHER BUSINESS
The board of directors does not intend to bring any other business before
the meeting and it is not aware that anyone else intends to do so. If any other
business comes before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote as proxies in accordance with their best
judgment.
PLEASE EXERCISE YOUR RIGHT TO VOTE BY PROMPTLY COMPLETING, SIGNING AND
RETURNING THE ENCLOSED PROXY FORM. You may later revoke the proxy and, if you
are able to attend the meeting, you may vote your shares in person.
By Order of the Board of directors,
/s/ Arnold L. Wadler
---------------------------------------------------------
Arnold L. Wadler
SECRETARY
April 14, 1999
24
APPENDIX A
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
METROMEDIA FIBER NETWORK, INC.
(Pursuant to Section 242 of the Delaware General Corporation Law)
The undersigned, Silvia Kessel and Arnold L. Wadler, Executive Vice
President and Secretary, respectively, of Metromedia Fiber Network, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporation"), do hereby certify as follows:
1. The name of the corporation is Metromedia Fiber Network, Inc.
2. This Certificate of Amendment to the Amended and Restated Certificate of
Incorporation amends the Amended and Restated Certificate of
Incorporation of the Corporation to increase the authorized number of
shares of the Corporation's Common Stock, par value $.01 per share (the
"Common Stock").
3. The Amended and Restated Certificate of Incorporation of the Corporation
is hereby amended by replacing the first sentence of Article THIRD,
Section 4.1 thereof in its entirety and by substituting in its place the
following:
"The total number of shares of stock which the Corporation shall have
the authority to issue is 2,946,286,022, consisting of (i) 20,000,000
shares of Preferred Stock, the par value of $0.01 per share (the
"Preferred Stock"), (ii) 2,404,031,240 shares of Class A Common Stock,
par value $0.01 per share (the "Class A Common Stock), and (iii)
522,254,782 shares of Class B Common Stock, par value of $0.01 per share
(the "Class B Common Stock")."
4. The Board of directors of the Corporation duly adopted resolutions
pursuant to Section 242 of the Delaware General Corporation Law (the
"DGCL") proposing that this Certificate of Amendment to the Amended and
Restated Certificate of Incorporation be approved and declaring the
adoption of this Amendment to the Amended and Restated Certificate of
Incorporation to be advisable, and the stockholders of the Corporation
duly approved this Certificate of Amendment to the Restated Certificate
of Incorporation in accordance with Sections 211 and 242 of the DGCL.
Dated and attested to as of May , 1999.
METROMEDIA FIBER NETWORK, INC.
By:
-----------------------------------------
Name: Silvia Kessel
Title: Executive Vice President
Attest:
- -------------------------------------------
Name: Arnold L. Wadler
Title: Secretary
25
- -----------------------------------------------------------------------------
PROXY PROXY
METROMEDIA FIBER NETWORK, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 1999
The undersigned hereby appoints Gerard Benedeto, Dennis E. Codlin and
Arnold L. Wadler, and each of them, as proxies each with the power to appoint
his substitute, and hereby authorizes them to represent and to vote as
designated on the reverse side at the annual meeting of the stockholders of
Metromedia Fiber Network, Inc., to be held on May 18, 1999, at 10:00 a.m.,
local time, on the Concourse Level, 1285 Avenue of the Americas, New York,
New York 10019, and any and all adjournments thereof, all of the shares of
common stock, par value $.01 per share, of Metromedia Fiber Network, Inc.,
according to the number of votes which the undersigned would possess if
personally present, for the purposes of considering and taking action upon
the proposals set forth on the reverse side, as more fully set forth in the
Proxy Statement, dated April 9, 1999.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF
THE LISTED PROPOSALS
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
(Please date and sign on the reverse side)
- -----------------------------------------------------------------------------
FOLD AND DETACH HERE
- -----------------------------------------------------------------------------------------------------------------------------------
METROMEDIA FIBER NETWORK, INC. Please mark your vote
as in this example /X/
using dark ink only
1. Election of Directors--Nominees: 2. The adoption of the amendment to the 3. The ratification of the appointment
Howard M. Finkelstein, Stephen Metromedia Fiber Network, Inc. of Ernst & Young, LLP as independent
A. Garofalo and Vincent A. Amended and Restated Certificate auditors for the year ending
Galluccio of Incorporation December 31, 1999
For all nominees
except as marked
to the contrary
below
Withhold Authority FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/ / / / / / / / / / / / / / / /
/ / / / / / / / / / / / / / / /
/ / / / / / / / / / / / / / / /
_________________________________________________ IMPORTANT: Please sign exactly as name appears on
Nominees Exception this card. Each joint owner should sign. Executors,
INSTRUCTIONS: to withhold authority to vote for administrators, trustees, etc., should give full
any individual nominee, strike a line through name.
the nominee's name in the above list.
Date:___________________________________________ 1999
_____________________________________________________
Signature
_____________________________________________________
Please Print Name Here
_____________________________________________________
Signature
_____________________________________________________
Please Print Name Here
THIS PROXY WHEN PROPERLY EXECUTED SHALL VOTE IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE 'FOR' PROPOSALS NO. 1, 2 AND 3, IF NO DIRECTION IS MADE. THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2 AND 3 IN THEIR DISCRETION. THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING ON ANY ADJOURNMENT THEREOF.
- -----------------------------------------------------------------------------------------------------------------------------------
FOR AND DETACH HERE