AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1999AUGUST 22, 2000
REGISTRATION NO. 333-90587
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1
TO---------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------------------------------
CMGI, INC.
(Exact name of Registrant as Specified in its Charter)
DELAWARE 04-2921333
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
100 BRICKSTONE SQUARE, ANDOVER, MASSACHUSETTS 01810
(978) 684-3600
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
-------------------------------------------------
DAVID S. WETHERELL
PRESIDENT, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
CMGI, INC.
100 BRICKSTONE SQUARE
ANDOVER, MASSACHUSETTS 01810
(978) 684-3600
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service)
Copies to:
WILLIAM WILLIAMS II DAVID J. GOLDSCHMIDT, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
CMGI, INC. 919 THIRD AVENUE
100 BRICKSTONE SQUARE NEW YORK, NEW YORK 10022
ANDOVER, MASSACHUSETTS 01810 (212) 735-3000
WILLIAM WILLIAMS II DAVID T. BREWSTER
VICE PRESIDENT AND GENERAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
CMGI, INC. ONE BEACON STREET
100 BRICKSTONE SQUARE BOSTON, MASSACHUSETTS 02108
ANDOVER, MASSACHUSETTS 01810 (617) 573-4825
(978) 684-3600
----------------------
APROXIMATE
---------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such time or times on
SALE TO THE PUBLIC: and after the date on which this
Registration Statementregistration statement becomes
effective as the selling
stockholders may determine.
-------------------------------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed
Title Of Each Class of Amount To Be Offering Price Maximum Aggregate Amount Of
Securities to be Registered Registered (1) Per Share (1) Offering Price (1)(2) Registration Fee
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Common Stock, par value $0.01 per share 10,810,911 $36.44 $393,949,613 $104,002.70
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Total $393,949,613 $104,002.70
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(1) The shares of common stock being registered may be issued to the
holders of interests in promissory notes of the Registrant issued in
connection with the purchase by the Registrant of a controlling
interest of Tallan, Inc. The Registrant has the option of paying, on
or before maturity, some or all of the principal and interest owed on
the notes in either cash or common stock or a combination thereof. The
number of shares of common stock being registered represents a
good-faith estimate of the number of such shares the Registrant would
be required to issue to repay the promissory notes, plus interest
thereon through maturity, as it may be extended by the Registrant, in
common stock as determined by dividing aggregate principal amount of
the promissory notes, plus interest thereon through maturity,
reflected as the Proposed Maximum Aggregate Offering Price above, by
the closing price per share of CMGI common stock, as reported on the
Nasdaq National Market on August 11, 2000 reflected as the Proposed
Maximum Offering Price Per Share above.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
[FLAG]
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERSWE
MAY NOT SELL THESE SECURITIES PURSUANT TO THIS
PROSPECTUS UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to completion, preliminary prospectus dated November 17, 1999
PROSPECTUS
CMGI, INC.
4,971,497August 22, 2000
Prospectus
10,810,911 SHARES
COMMON STOCK
-----------------------------
SellingCMGI, INC.
100 Brickstone Square
Andover, Massachusetts 01810
(978) 684-3600
------------------------------------
This prospectus registers for resale by the former stockholders who are identified in this prospectus may
offer and sell from time to time up to 4,971,497of
Tallan, Inc. the shares of common stock of
CMGI, Inc. by using this prospectus.
-----------------------------
The offering price for the common stock may be the market price for our common stock prevailing atthat we may issue upon
repayment of certain promissory notes. The consideration paid to the timeformer
stockholders of sale,Tallan, Inc. for our purchase of a controlling interest in
Tallan, Inc. on March 31, 2000, included three promissory notes. One note,
in the principal amount of $241,794,649.00, matures on September 30, 2000
and two notes, in the aggregate principal amount of $135,101,879.00, mature
on December 31, 2000. Each promissory note allows us to extend the maturity
date by up to 30 days. We have the option, on or before the maturity of the
notes, of paying some or all of the principal and interest owed on the
notes in our common stock. We put these notes in escrow on behalf of the
former Tallan, Inc. stockholders, pending payment on or before maturity
and, in the case of one of the notes maturing on December 31, 2000 in the
principal amount of $50,000,000.00, pending the resolution of
indemnification claims, if any.
We will value the shares of our common stock to be issued upon
payment of the notes based upon the average of the closing price relatedper share
of our common stock, as reported on the Nasdaq National Market (the
"Nasdaq"), on the five consecutive trading days immediately preceding the
third trading day prior to such
prevailing market price, at negotiated prices or such
other price as the selling stockholders determine from time to time.
-----------------------------
CMGI'sdate of repayment of the respective note.
Our common stock is traded on the Nasdaq National Market under the ticker symbol
"CMGI"."CMGI." On November 16, 1999,August 11, 2000, the last reported sales price of the common
stock was $103 3/4$36.44 per share.
-----------------------------The selling stockholders identified in this prospectus, or their
pledgees, donees, transferees or other successors- in-interest, may offer
the shares from time to time through public or private transactions at
prevailing market prices, at prices related to prevailing market prices or
at privately negotiated prices. More detailed information concerning the
distribution of the shares is contained in the section of this prospectus
entitled "Plan of Distribution" which begins on page 16.
We will not receive any proceeds from the sale of the shares.
The selling stockholders will pay all brokerage fees and
commissions and similar sale-related expenses. We are paying expenses
relating to the registration of the shares with the Securities and Exchange
Commission.
We urge you to read this prospectus and the accompanying
prospectus supplement carefully before you make your investment decision.
------------------------------------
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES
REGULATORS HAVE NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS.A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 1.
-----------------------------
The Securities and Exchange Commission and state------------------------------------
This prospectus may not be used to sell securities regulators have not approved or disapproved of these securities or
determined if thisunless accompanied
by a prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
, 1999supplement.
TABLE OF CONTENTS
Page
RISK FACTORS..............................................................1
CMGI, INC.................................................................7FACTORS ..............................................................1
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS...........................8
ABOUT THIS PROSPECTUS......................................................9
DESCRIPTION OF CAPITAL STOCK...............................................9
USE OF PROCEEDS...........................................................8PROCEEDS...........................................................14
THE SELLING STOCKHOLDERS..................................................8STOCKHOLDERS..................................................14
PLAN OF DISTRIBUTION......................................................9DISTRIBUTION......................................................16
LEGAL MATTERS............................................................11MATTERS.............................................................18
EXPERTS .................................................................12.................................................................18
WHERE YOU CAN FIND MORE INFORMATION ABOUT US.............................12US..............................20
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...........................21
PART II ...............................................................II-1
SIGNATURES..............................................................II-5
POWER OF ATTORNEY.......................................................II-5
EXHIBIT INDEX...........................................................II-6
RISK FACTORS
IfAn investment in our securities is extremely risky. This section
describes risks involved in purchasing our securities. Before you purchase shares ofinvest in
our common stock, you will take on
financial risk. In deciding whether to invest,securities, you should consider carefully
consider the following factors,risks, in
addition to the other information containedpresented in this prospectus and the
other information that we have referred you to.
It is especially important to keep these risk factorsdocuments incorporated by reference into this prospectus, in
mind when
you read forward-looking statements. These are statements that relate to
future periods and include statements about our:
o expected operating results;
o market opportunities;
o acquisition opportunities;
o ability to compete; and
o stock price.
Generally, the words "anticipates," "believes," "expects,"
"intends" and similar expressions identify such forward-looking statements.
Forward-looking statements involve risks and uncertainties,evaluating us and our actual
results could differ materially from the results discussed in the
forward-looking statements because of these and other factors.
Forward-looking statements are current only asbusiness. Any of the datefollowing risks could seriously
harm our business and financial results and cause the value of this
prospectus. We do not have any obligationour
securities to informdecline, which in turn could cause you if forward-looking
statements,to lose all or the circumstances they are based on, change.
As used herein, "CMGI," "we" or "us" refers topart of
your investment.
RISKS PARTICULAR TO CMGI
Inc. and its
consolidated subsidiaries.
CMGIWE MAY NOT HAVE OPERATING INCOME OR NET INCOME IN THE FUTURE.
During the fiscal year ended July 31, 1999 CMGIand for the nine months
ended April 30, 2000, we had an operating loss of approximately $127
million and net income of approximately $475
million. CMGI may not have$1.4 billion, respectively. We anticipate continuing to incur
significant operating income or net incomeexpenses in the future. If
CMGI continuesfuture, including significant costs
of revenues and selling, general and administrative and amortization
expenses. As a result, we expect to havecontinue to incur operating losses CMGIand
may not have enough money to expand itsgrow our business in the future. CMGIWe cannot
assure you that we will achieve profitability or be capable of sustaining
profitable operations.
WE MAY HAVE PROBLEMS RAISING MONEY IT NEEDSWE NEED IN THE FUTURE.
In recent years, CMGI haswe have financed itsour operating losses in part with
profits from selling some of the stock of companies in which itwe had
invested.invested through our @Ventures funds. This funding source may not be
sufficient in the future, and CMGIwe may need to obtain funding from outside
sources. However, CMGIwe may not be able to obtain funding from outside
sources. In addition, even if CMGI
findswe find outside funding sources, CMGIwe may be
required to issue to such outside sources securities with greater rights
than thatthose currently possessed by holders of shares of our common stock. CMGIWe
may also be required to take other actions, which may lessen the value of
our common stock, including borrowing money on terms that are not favorable
to CMGI.
CMGI'S SUCCESS DEPENDS GREATLY ON INCREASED USE OF THE INTERNET BY BUSINESS
AND INDIVIDUALS.
CMGI's success depends greatly on increased use of the Internet for
advertising, marketing, providing services, and conducting business.
Commercial use of the Internet is currently at an early stage of
development and the future of the Internet is not clear. In addition, it is
not clear how effective advertising on the Internet is in generating
business as compared to more traditional types of advertising such as
print, television, and radio. Because a significant portion of CMGI's
business depends on CMGI's Internet operating company subsidiaries, CMGI's
business will suffer if commercial use of the Internet fails to grow in the
future.
CMGIus.
WE MAY INCUR SIGNIFICANT COSTS TO AVOID INVESTMENT COMPANY STATUS AND MAY
SUFFER ADVERSE CONSEQUENCES IF DEEMED TO BE AN INVESTMENT COMPANY.
CMGIWe may incur significant costs to avoid investment company status and
may suffer other adverse consequences if deemed to be an investment company
under the Investment Company Act of 1940. Some of our equity investments in
other businesses made by CMGI and itsour venture subsidiaries may constitute investment
securities under the 1940Investment Company Act. A company may be deemed to be
an investment company if it owns investment securities with a value
exceeding 40% of its total assets, subject to certain exclusions.
Investment companies are subject to registration under, and compliance
with, the 1940Investment Company Act unless a particular exclusion or Commission safe
harbor provision applies. If CMGIwe were to be deemed an investment company, itwe
would become subject to the requirements of the 1940Investment Company Act. As
a consequence, CMGIwe would be prohibited from engaging in business or issuing
itsour securities as it haswe have in the past and might be subject to civil and
criminal penalties for noncompliance. In addition, certain of CMGI'sour contracts
might be voidable, and a court-appointed receiver could take control of CMGIus
and liquidate itsour business.
Although CMGI'sour investment securities currently comprise less than 40% of
itsour total assets, fluctuations in the value of these securities or of CMGI'sour
other assets may cause this limit to be exceeded. ThisUnless an exclusion or
safe harbor was available to us, we would require
CMGIhave to attempt to reduce itsour
investment securities as a percentage of itsour total assets. This reduction
can be attempted in a number of ways, including the disposition of
investment securities and the acquisition of non-investment security
assets. If CMGI sellswe were required to sell investment securities, itwe may sell them
sooner than itwe otherwise would. These sales may be at depressed prices and
CMGIwe may never realize anticipated benefits from, or may incur losses on,
these investments. SomeWe may be unable to sell some investments may not be sold due to
contractual or legal restrictions or the inability to locate a suitable
buyer. Moreover, CMGIwe may incur tax liabilities when it sellswe sell assets. CMGIWe may
also be unable to purchase additional investment securities that may be
important to itsour operating strategy. If CMGI decideswe decide to acquire non-investment
security assets, itwe may not be able to identify and acquire suitable assets
and businesses.
CMGI DEPENDSbusinesses or the terms on which we are able to acquire such assets may
be unfavorable.
WE DEPEND ON CERTAIN IMPORTANT EMPLOYEES, AND THE LOSS OF ANY OF THOSE
EMPLOYEES MAY HARM CMGI'SOUR BUSINESS.
CMGI'sOur performance is substantially dependent on the performance of itsour
executive officers and other key employees, in particular, David S.
Wetherell, itsour chairman, president and chief executive officer, Andrew J.
Hajducky III, itsour executive vice president, chief financial officer and
treasurer, and David Andonian, itsour president, of corporate development. The
familiarity of these individuals with the Internet industry makes them
especially critical to CMGI'sour success. In addition, CMGI'sour success is dependent
on itsour ability to attract, train, retain and motivate high quality
personnel, especially for itsour management team. The loss of the services of
any of CMGI'sour executive officers or key employees may harm itsour business. CMGI'sOur
success also depends on itsour continuing ability to attract, train, retain
and motivate other highly qualified technical and managerial personnel.
Competition for such personnel is intense.
THERE MAY BE CONFLICTS OF INTEREST AMONG OUR NETWORK COMPANIES, OUR
OFFICERS, DIRECTORS AND STOCKHOLDERS AND US.
Some of our officers and directors also serve as officers or directors
of one or more of our network companies. As a result we, our officers and
directors, and our network companies may face potential conflicts of
interest with each other and with our stockholders. Specifically, our
officers and directors may be presented with situations in their capacity
as officers or directors of one of our network companies that conflict with
their fiduciary obligations as officers or directors of our company or of
another network company.
IN FISCAL 1999 CMGI'S REVENUE DEPENDED IN LARGE PART ONAND THE FIRST NINE MONTHS OF FISCAL 2000, WE DERIVED A
SINGLE CUSTOMERSIGNIFICANT PORTION OF OUR REVENUES FROM A SMALL NUMBER OF CUSTOMERS AND
THE LOSS OF THAT CUSTOMERANY OF THOSE CUSTOMERS COULD SIGNIFICANTLY DAMAGE CMGI'SOUR BUSINESS.
During the fiscal year ended July 31, 1999, CMGI derived a
significant portion of its revenues from a small number of customers.
During the fiscal year ended July 31, 1999, sales to CMGI's largest
customer, Cisco Systems,
Inc., accounted for 36% of CMGI'sour total revenues and 47% of CMGI'sour revenues from
itsour fulfillment services business. CMGI
believessegment. During the nine months ended April 30,
2000, sales to Cisco accounted for 13.4% of our total revenues and 56.4% of
our revenues from our fulfillment services segment. We currently do not
have any agreements with Cisco which obligate this customer to buy a
minimum amount of products from us or to designate us as its sole supplier
of any particular products or services. During the nine months ended April
30, 2000, approximately 16.5% of our total revenues and 21% of revenues
from our Internet segment were derived from customer advertising contracts
serviced by DoubleClick, Inc. We believe that itwe will continue to derive a
significant portion of itsour operating revenuesrevenue from sales to a small number
of customers.
CMGI
currently does notOUR STRATEGY OF SELLING ASSETS OF OR INVESTMENTS IN THE COMPANIES THAT WE
HAVE ACQUIRED AND DEVELOPED PRESENTS RISKS.
One element of our business plan involves raising cash for working
capital for our Internet business by selling, in public or private
offerings, some of the companies, or portions of the companies, that we
have any agreements with Cisco which obligate Ciscoacquired and developed. Market and other conditions largely beyond our
control affect:
o our ability to buy a minimumengage in such sales;
o the timing of such sales; and
o the amount of productsproceeds from CMGIsuch sales.
As a result, we may not be able to sell some of these assets. In
addition, even if we are able to sell, we may not be able to sell at
favorable prices. If we are unable to sell these assets at favorable
prices, our business will be harmed.
OUR STOCK PRICE MAY FLUCTUATE BECAUSE THE VALUE OF SOME OF OUR COMPANIES
FLUCTUATES.
A portion of our assets include the equity securities of both publicly
traded and non-publicly traded companies. For example, we, directly or
through our @Ventures funds, own a significant number of shares of common
stock of Critical Path, Engage, Hollywood Entertainment, Kana
Communications, Lycos, Marketing Services Group, MotherNature.com,
NaviSite, Netcentives, Pacific Century CyberWorks, Primedia, Ventro and
Vicinity, which are publicly traded companies. The market price and
valuations of the securities that we hold in these and other companies may
fluctuate due to designate CMGI as their
sole suppliermarket conditions and other conditions over which we have
no control. Fluctuations in the market price and valuations of any particular products or services.
CMGI'Sthe
securities that we hold in other companies may result in fluctuations of
the market price of our common stock and may reduce the amount of working
capital available to us.
OUR STRATEGY OF EXPANDING ITSOUR BUSINESS THROUGH ACQUISITIONS OF OTHER
BUSINESSES AND TECHNOLOGIES PRESENTS SPECIAL RISKS.
CMGI intendsWe intend to continue to expand through the acquisition of businesses,
technologies, products and services from other businesses. Acquisitions
involve a number of special problems, including:
o difficulty integrating acquired technologies, operations, and
personnel with theour existing business;businesses;
o diversion of management attention in connection with both
negotiating the acquisitions and integrating the assets;
o strain on managerial and operational resources as management
tries to oversee larger operations;
o exposure to unforeseen liabilities of acquired companies;
o potential issuance of securities in connection with thean
acquisition which securities lessenwith rights that are superior to the rights of
holders of CMGI'sour currently outstanding securities;
o the need to incur additional debt; and
o the requirement to record potentially significant additional
future operating costs for the amortization of goodwill and other
intangible assets, which amounts could
be significant.
CMGIassets.
We may not be able to successfully address these problems. Moreover,
CMGI'sour future operating results will depend to a significant degree on itsour
ability to successfully manage growth and integrate acquisitions. In
addition, many of CMGI'sour investments are in early-stage companies with limited
operating histories and limited or no revenues. CMGIWe may not be able to
successfully develop these young companies.
GROWING CONCERNS ABOUT THE USEWE FACE COMPETITION FROM OTHER ACQUIRORS OF "COOKIES"AND INVESTORS IN
INTERNET-RELATED VENTURES WHICH MAY LIMIT OUR ABILITY TO
DEVELOP USER PROFILES.
Web sites typically place small filesPREVENT US FROM REALIZING STRATEGIC
OPPORTUNITIES.
Although we create many of information commonly known
as "cookies" on a user's hard drive, generally without the user's knowledgeour network companies ourselves, we also
acquire or consent. Cookie information is passedinvest in existing companies that we believe are complementary
to the Web site through the
Internet user's browser software. Our technology currently uses cookies to
collect information about an Internet user's movement throughour network and further our vision of the Internet. Most currently availableIn pursuing these
opportunities, we face competition from other capital providers and
incubators of Internet-related companies, including publicly-traded
Internet browsers allow userscompanies, venture capital companies and large corporations. Some
of these competitors have greater financial resources than we do. This
competition may limit our opportunity to modify their
browser settings to prevent cookies from being stored on their hard drive,
and a small minority of users are currently choosing to do so. Users can
also delete cookies from their hard drive at any time. Some Internet
commentators, privacy advocates and governmental bodies have suggested
limiting or eliminating the use of cookies. The effectiveness ofacquire interests in companies
that could advance our technology could be limited by any reduction or limitation in the use of
cookies. If the use or effectiveness of cookies is limited, we would likely
have to switch to other technology that allows us to gather demographic and
behavioral information. This could require significant reengineering time
and resources, might not be completed in time to avoid negative
consequences to our business, financial condition or results of operations,
and might not be possible at all.
IF THE UNITED STATES OR OTHER GOVERNMENTS REGULATE THE INTERNET MORE
CLOSELY, CMGI'S BUSINESS MAY BE HARMED.
Because of the Internet's popularity and increasing use, new laws
and regulations may be adopted. These laws and regulations may cover issues
such as privacy, pricing and content. The enactment of any additional laws
or regulations may impede the growthvision of the Internet and CMGI's
Internet-related business and could place additional financial burdens on
CMGI's business.
TO SUCCEED, CMGI MUST RESPOND TO THE RAPID CHANGES IN TECHNOLOGY AND
DISTRIBUTION CHANNELS RELATED TO THE INTERNET.
The markets for CMGI's Internet products and services are
characterized by:
o rapidly changing technology;
o evolving industry standards;
o frequent new product and service introductions;
o shifting distribution channels; and
o changing customer demands.
CMGI's success will depend on its ability to adapt to this rapidly
evolving marketplace. CMGI may not be able to adequately adapt its products
and services or to acquire new products and services that can compete
successfully. In addition, CMGI may not be able to establish and maintain
effective distribution channels.
CMGI IS SUBJECT TO INTENSE COMPETITION.
The market for Internet products and services is highly
competitive. Moreover, the market for Internet products and services lacks
significant barriers to entry, enabling new businesses to enter this market
relatively easily. Competition in the market for Internet products and
services may intensify in the future. Numerous well-established companies
and smaller entrepreneurial companies are focusing significant resources on
developing and marketing products and services that will compete with
CMGI's products and services. In addition, many of CMGI's current and
potential competitors have greater financial, technical, operational, and
marketing resources. CMGI may not be able to compete successfully against
these competitors in selling its goods and services. Competitive pressures
may also force prices for Internet goods and services down and such price
reductions may reduce CMGI's revenues.
CMGI'S STRATEGY OF SELLING ASSETS OF OR INVESTMENTS IN THE COMPANIES THAT
CMGI HAS ACQUIRED AND DEVELOPED PRESENTS RISKS.
A significant element of CMGI's business plan involves selling, in
public or private offerings, the companies, or portions of the companies,
that it has acquired and developed. Market and other conditions largely
beyond CMGI's control affect:
o CMGI's ability to engage in such sales;
o the timing of such sales; and
o the amount of proceeds from such sales.
As a result, CMGI may not be able to sell some of these assets. In
addition, even if CMGI is able to sell, it may not be able to sell at
favorable prices. If CMGI is unable to sell these assets at favorable
prices, its business will be harmed.
THE VALUE OF CMGI'S BUSINESS MAY FLUCTUATE BECAUSE THE VALUE OF SOME OF ITS
ASSETS FLUCTUATES.
A portion of CMGI's assets include the equity securities of both
publicly traded and non-publicly traded companies. In particular, CMGI owns
a significant number of shares of common stock of Engage Technologies,
Inc., NaviSite, Inc., Lycos, Inc., Yahoo!, Hollywood Entertainment
Corporation, Chemdex Corporation, Silknet Software, Inc. and Critical Path,
Inc., which are publicly traded companies. The market price and valuations
of the securities that CMGI holds in these and other companies may
fluctuate due to market conditions and other conditions over which CMGI has
no control. Fluctuations in the market price and valuations of the
securities that CMGI's holds in other companies may result in fluctuations
of the market price of CMGI's common stock and may reduce the amount of
working capital available to CMGI.
CMGI'Sincrease our value.
OUR GROWTH PLACES STRAINSSTRAIN ON ITSOUR MANAGERIAL, OPERATIONAL AND FINANCIAL
RESOURCES.
CMGI'sOur rapid growth has placed, and is expected to continue to place, a
significant strain on itsour managerial, operational and financial resources.
Further, as the number of CMGI'sour users, advertisers and other business
partners grows, CMGIwe will be required to manage multiple relationships with
various customers, strategic partners and other third parties. FurtherOur further
growth of CMGI or an increase in the number of itsour strategic relationships will
increase this strain on CMGI'sour managerial, operational and financial
resources, inhibiting CMGI'sour ability to achieve the rapid execution necessary
to successfully implement itsour business plan.
In addition, CMGI's future success will also depend on its ability to
expand its sales and marketing organization and its support organization
commensurate with the growth of CMGI's business and the Internet.
CMGIWE MUST DEVELOP AND MAINTAIN POSITIVE BRAND NAME AWARENESS.
CMGI believesWe believe that establishing and maintaining itsour brand names is
essential to expanding itsour Internet business and attracting new customers.
CMGIWe also believesbelieve that the importance of brand name recognition will increase
in the future because of the growing number of Internet companies that will
need to differentiate themselves. Promotion and enhancement of CMGI'sour brand
names will depend largely on CMGI'sour ability to provide consistently
high-quality products and services. If CMGI iswe are unable to provide
high-quality products and services, the value of itsour brand namenames may
suffer.
CMGI'SOUR QUARTERLY RESULTS MAY FLUCTUATE WIDELY.
CMGI'sOur operating results have fluctuated widely on a quarterly basis
during the last several years, and CMGI expectswe expect to experience significant
fluctuation in future quarterly operating results. Many factors, some of
which are beyond CMGI'sour control, have contributed to these quarterly
fluctuations in the past and may continue to do so. Such factors include:
o demand for CMGI'sour products and services;
o payment of costs associated with CMGI'sour acquisitions, sales of
assets and investments;
o timing of sales of assets;
o market acceptance of new products and services;
o specific economic conditions in the Internet and direct marketing
industries; and
o general economic conditions.
The emerging nature of the commercial uses of the Internet makes
predictions concerning CMGI'sour future revenues difficult. CMGI believesWe believe that
period-to-period comparisons of itsour results of operations will not
necessarily be meaningful and should not be relied upon as indicative of
CMGI'sour future performance. It is also possible that in some fiscal quarters,
CMGI'sour operating results will be below the expectations of securities analysts
and investors. In such circumstances, the price of CMGI'sour common stock may
decline.
THE PRICE OF CMGI'SOUR COMMON STOCK HAS BEEN VOLATILE.
The market price of CMGI'sour common stock has been, and is likely to
continue to be, volatile, experiencing wide fluctuations. In recent years,
the stock market has experienced significant price and volume fluctuations
which have particularly impacted the market prices of equity securities of
many companies providing Internet-related products and services. Some of
these fluctuations appear to be unrelated or disproportionate to the
operating performance of such companies. Future market movements may
adversely affect the market price of CMGI'sour common stock.
OWNERSHIP OF CMGI FACESIS CONCENTRATED.
David S. Wetherell, our chairman, president and chief executive
officer, beneficially owned approximately 12% of our outstanding common
stock as of April 30, 2000. As a result, Mr. Wetherell possesses
significant influence over CMGI on matters, including the election of
directors. Additionally, Compaq Computer Corporation owned approximately
15% of our outstanding common stock as of April 30, 2000. The concentration
of our share ownership may:
o delay or prevent a change in our control;
o impede a merger, consolidation, takeover, or other transaction
involving CMGI; or
o discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of CMGI.
WE RELY ON NAVISITE FOR WEB SITE HOSTING.
We and many of our operating companies rely on NaviSite for network
connectivity and hosting of servers. If NaviSite fails to perform such
services, our internal business operations may be interrupted, and the
ability of our operating companies to provide services to customers may
also be interrupted. Such interruptions may have an adverse impact on our
business and revenues and our operating companies.
CMGI LITIGATION.
On February 9, 2000, International Merchandising Corporation and
International Managements, Inc. (collectively, "IMG") filed a complaint in
the United States District Court for the Northern District of Ohio, Eastern
Division, against Signatures SNI, Inc., Signatures Network, Inc.
(collectively "Signatures") subsidiaries of iCAST, iCAST, a subsidiary of
CMGI, and CMGI. The complaint asserted claims against Signatures for breach
of contract, promissory estoppel, and quantum meruit and claims against
CMGI and iCAST for tortious interference with contract and tortious
interference with prospective contractual relations. The complaint sought
compensatory damages of not less than $15,000,000, Signatures stock
options, the unspecified value of alleged services performed by IMG,
unspecified punitive damages, and costs. On February 22, 2000, IMG filed
with the court a motion to compel arbitration. On April 1, 2000, the
parties entered into an Alternative Dispute Resolution Agreement, pursuant
to which IMG voluntarily withdrew its motion to compel arbitration and
agreed to waive its claim for punitive damages. The parties agreed to
submit all claims they may have against each other to mediation and, if
mediation proves to be unsuccessful, to private, binding arbitration. On
April 7, 2000, IMG filed with the court its notice of voluntary dismissal
of the federal court action. The parties are currently mediating the
dispute. The defendants believe that they have valid defenses to IMG's
asserted claims. If we do not prevail, the outcome could adversely affect
our financial condition and results of operations.
On or about March 15, 2000, CMGI and certain of its officers and
directors, as well as certain officers and directors of Engage, a
subsidiary of CMGI, were sued by a shareholder of Engage in what purported
to be a derivative action on behalf of Engage. The lawsuit is captioned
Doris B. Sollod, Plaintiff, v. Edward A. Bennett, Christopher A. Evans,
Craig D. Goldman, Andrew J. Hajducky, III, Frederic D. Rosen, Paul L.
Schaut, David S. Wetherell and CMGI, Inc., Defendants and Engage
Technologies, Inc., Nominal Defendant, Civil Action No. 17886-NC, Court of
Chancery, New Castle County, Delaware. The complaint arose out of the
intended sale by CMGI of its subsidiaries, Flycast and Adsmart, to Engage,
as announced on or about January 20, 2000. The plaintiff alleged, inter
alia, that CMGI and the individual defendants violated their fiduciary
duties, duties of loyalty and good faith, and engaged in self-dealing with
regard to the transaction, which the complaint alleged is unfair to Engage.
The complaint requested, inter alia, that the court (1) enjoin the
defendants from taking any steps in furtherance of the transaction; (2)
award recissory damages to Engage and rescind the transaction if it is
consummated; (3) direct the defendants to account to Engage for its damages
and CMGI's profits; and (4) award the plaintiff her costs, disbursements
and fees. On August 15, 2000, the plaintiff filed a stipulation of
dismissal. The parties expect that the court will endorse the stipulation
and the matter will be dismissed.
Neil Braun, the former president and chief executive officer of iCAST
Corporation, a subsidiary of CMGI, filed a complaint in the United States
District Court, Southern District of New York, on December 22, 1999 against
CMGI, iCAST and David S. Wetherell, chief executive officer and chairman of
CMGI, alleging certain claims arising out of the termination of Mr. Braun's
employment with iCAST. As set forth in the complaint, Mr. Braun is seeking,
among other things, monetary damages in excess of $50 million and specific
performance of certain alleged contractual obligations that would require
iCAST to deliver to Mr. Braun an equity interest in iCAST. On January 31,
2000, an answer to the complaint was filed on behalf of CMGI, iCAST and Mr.
Wetherell. The parties are currently engaged in discovery. The defendants
plan to vigorously defend against these claims. If we do not prevail in
this proceeding, the outcome could adversely affect our financial condition
and results of operations. The parties are currently conducting discovery
in this matter.
RISKS PARTICULAR TO OUR NETWORK COMPANIES
THE SUCCESS OF OUR NETWORK COMPANIES DEPENDS GREATLY ON INCREASED USE OF
THE INTERNET BY BUSINESS AND INDIVIDUALS.
The success of our network companies depends greatly on increased use
of the Internet for advertising, marketing, providing services and
conducting business. Commercial use of the Internet is currently at an
early stage of development and the future of the Internet is not clear. In
addition, it is not clear how effective advertising on the Internet is in
generating business as compared to more traditional types of advertising
such as print, television and radio. The businesses of our network
companies will suffer if commercial use of the Internet fails to grow in
the future.
OUR NETWORK COMPANIES ARE SUBJECT TO INTENSE COMPETITION.
The market for Internet products and services is highly competitive.
Moreover, the market for Internet products and services lacks significant
barriers to entry, enabling new businesses to enter this market relatively
easily. Competition in the market for Internet products and services may
intensify in the future. Numerous well-established companies and smaller
entrepreneurial companies are focusing significant resources on developing
and marketing products and services that will compete with the products and
services of our network companies. In addition, many of the current and
potential competitors of our network companies have greater financial,
technical, operational and marketing resources than those of our network
companies. Our network companies may not be able to compete successfully
against these competitors. Competitive pressures may also force prices for
Internet goods and services down and such price reductions may reduce the
revenues of our network companies.
GROWING CONCERNS ABOUT THE USE OF "COOKIES" MAY LIMIT ENGAGE'S ABILITY TO
DEVELOP USER PROFILES.
Web sites typically place small files of information commonly known as
"cookies" on a user's hard drive, generally without the user's knowledge or
consent. Cookie information is passed to the Web site through the Internet
user's browser software. Engage's technology currently uses cookies to
collect information about an Internet user's movement through the Internet.
Most of the currently available Internet browsers allow users to modify
their browser settings to prevent cookies from being stored on their hard
drive, and a small minority of users currently choose to do so. Users can
also delete cookies from their hard drive at any time. In addition,
Microsoft, the leading provider of computer browser software, has announced
a plan to modify its product to prompt users in certain situations when
cookies are set on a user's computer. Some Internet commentators and
privacy advocates have suggested limiting or eliminating the use of
cookies, and recently, the FTC initiated an informal inquiry into the data
collection practices of DoubleClick, Inc. The effectiveness of Engage's
technology could be limited by any reduction or limitation in the use of
cookies. If the use or effectiveness of cookies is limited, Engage would
likely have to switch to other technology that would allow it to gather
demographic and behavioral information. This could require significant
reengineering time and resources, might not be completed in time to avoid
negative consequences to our business, financial condition or results of
operations, and might not be possible at all.
IF THE UNITED STATES OR OTHER GOVERNMENTS REGULATE THE INTERNET MORE
CLOSELY, THE BUSINESSES OF OUR NETWORK COMPANIES MAY BE HARMED.
Because of the Internet's popularity and increasing use, new laws and
regulations may be adopted. These laws and regulations may cover issues
such as privacy, pricing, taxation and content. The enactment of any
additional laws or regulations may impede the growth of the Internet and
the Internet-related business of our network companies and could place
additional financial burdens on their businesses.
TO SUCCEED, OUR NETWORK COMPANIES MUST RESPOND TO THE RAPID CHANGES IN
TECHNOLOGY AND DISTRIBUTION CHANNELS RELATED TO THE INTERNET.
The markets for the Internet products and services of our network
companies are characterized by:
o rapidly changing technology;
o evolving industry standards;
o frequent new product and service introductions;
o shifting distribution channels; and
o changing customer demands.
The success of our network companies will depend on their ability to
adapt to this rapidly evolving marketplace. They may not be able to
adequately adapt their products and services or to acquire new products and
services that can compete successfully. In addition, our network companies
may not be able to establish and maintain effective distribution channels.
OUR NETWORK COMPANIES FACE SECURITY RISKS.
The secure transmissionConsumer concerns about the security of transmissions of confidential
information over public telecommunications facilities is a significant
barrier to electronic commerce and communications on the Internet. Many
factors may cause compromises or breaches of the security systems used by CMGIour
network companies or other Internet sites use to protect proprietary
information, including advances in computer and software functionality or
new discoveries in the field of cryptography. A compromise of security on
the Internet would have a negative effect on the use of the Internet for
commerce and communications and negatively impact CMGI's business.our network companies'
businesses. Security breaches of their activities or the activities of
CMGI, itstheir customers and sponsors involving the storage and transmission of
proprietary information, such as credit card numbers, may expose CMGIour
network companies to a risk of loss or litigation and possible liability.
CMGIWe cannot assure that itsthe security measures of our network companies will
prevent security breaches.
OWNERSHIP OF CMGI IS CONCENTRATED.
David S. Wetherell, CMGI's chairman, president, and chief executive
officer, beneficially owned approximately 15% of CMGI's outstanding common
stock as of October 22, 1999. As a result, Mr. Wetherell possesses
significant influence over CMGI on matters including the election of
directors. Additionally, Compaq Computer Corporation and its wholly owned
subsidiary Digital Equipment Corporation owned approximately 18% of CMGI's
outstanding common stock as of October 28, 1999. The concentration of
CMGI's share ownership may:
o delay or prevent a change in control of CMGI;
o impede a merger, consolidation, takeover, or other transaction involving
CMGI; or
o discourage a potential acquiror from making a tender offer or
otherwise attempting to obtain control of CMGI.
CMGI'S BUSINESS WILL SUFFER IF ANY OF ITS PRODUCTS OR SYSTEMS, OR THE
PRODUCTS OR SYSTEMS OF THIRD PARTIES ON WHICH CMGI RELIES, FAIL TO BE YEAR
2000 COMPLIANT.
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date
code fields will need to accept four digit entries distinguishing 21st
century dates from 20th century dates in order to be year 2000 compliant.
CMGI's products and systems and those of third parties on whom CMGI relies
may fail to be year 2000 compliant. CMGI's failure to resolve year 2000
issues may damage its business and expose CMGI to third party liability. If
third party equipment or software used in CMGI's business is not year 2000
compliant, CMGI may incur significant unanticipated expenses to remedy such
problems. CMGI also relies on vendors, utility companies,
telecommunications service companies, delivery service companies and other
service providers, each of which may not be year 2000 compliant.
As of July 31, 1999, CMGI had incurred approximately $3 million in
connection with year 2000 compliance and expects to incur an additional
$1.5 to $2.0 million. Because of CMGI's recent acquisitions of a number of
companies in varying stages of year 2000 compliance assessment and
unforeseeable year 2000 expenses, CMGI's year 2000 costs may exceed these
estimates.
NaviSite, a subsidiary of CMGI that hosts and provides application
management services, may fail to be year 2000 compliant. NaviSite may be
exposed to additional year 2000 risks because its customers, or their
outside service providers, have customized much of the customer-provided
hardware and software hosted at NaviSite's data centers. NaviSite's
customers are responsible for their year 2000 compliance. However, CMGI
cannot assure you that NaviSite's customers will be year 2000 compliant.
Many of CMGI's majority owned subsidiaries rely on NaviSite in connection
with their businesses. NaviSite's failure to be year 2000 compliant may
negatively impact these subsidiaries.
CMGI RELIES ON NAVISITE FOR NETWORK CONNECTIVITY.
CMGI and many of its majority owned subsidiaries rely on NaviSite
for network connectivity and hosting of servers. If NaviSite fails to
perform such services, CMGI's internal business operations may be
interrupted, and the ability of CMGI's majority owned subsidiaries to
provide services to customers may also be interrupted. Such interruptions
may have an adverse impact on the business and revenues of CMGI and its
majority owned subsidiaries.
THE SUCCESS OF CMGI'STHE GLOBAL OPERATIONS OF OUR NETWORK COMPANIES IS SUBJECT TO
SPECIAL RISKS AND COSTS.
CMGI hasOur network companies have begun, and intendsintend to continue, to expand
itstheir operations outside of the United States. This international expansion
will require significant management attention and financial resources. CMGI'sThe
ability of our network companies to expand their offerings of itsour products
and services internationally will be limited by the general acceptance of
the Internet and intranets in other countries. In addition, CMGI haswe and our
network companies have limited experience in such international activities.
Accordingly, CMGI expectswe and our network companies expect to commit substantial time
and development resources to customizing itsthe products and services of our
network companies for selected international markets and to developing
international sales and support channels.
CMGI expectsWe expect that itsthe export sales of our network companies will be
denominated predominantly in United States dollars. As a result, an
increase in the value of the United States dollar relative to other
currencies may make CMGI'sthe products and services of our network companies more
expensive and, therefore, potentially less competitive in international
markets. As CMGI increases itsour network companies increase their international sales, itstheir
total revenues may also be affected to a greater extent by seasonal
fluctuations resulting from lower sales that typically occur during the
summer months in Europe and other parts of the world.
CMGIOUR NETWORK COMPANIES COULD BE SUBJECT TO INFRINGEMENT CLAIMS.
From time to time, CMGI hasour network companies have been, and expectsexpect to
continue to be, subject to third party claims in the ordinary course of
business, including claims of our alleged infringement of intellectual
property rights by CMGI.rights. Any such claims may damage CMGI's businessthe businesses of our network
companies by:
o subjecting CMGIthem to significantsignifican liability for damages;
o invalidating CMGI'sresulting in invalidation of their proprietary rights;
o being time-consuming and expensive to defend even if such claims
are not meritorious; and
o resulting in the diversion of management time and attention.
CMGIOUR NETWORK COMPANIES MAY HAVE LIABILITY FOR INFORMATION RETRIEVED FROM THE
INTERNET.
Because materials may be downloaded from the Internet and subsequently
distributed to others, CMGIour network companies may be subject to claims for
defamation, negligence, copyright or trademark infringement, personal
injury or other theories based on the nature, content, publication and
distribution of such materials.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement contains or incorporates by reference
forward-looking statements. These are statements that relate to future
periods and include statements about our:
o expected operating results;
o market opportunities;
o acquisition opportunities;
o ability to compete; and
o stock price.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "could," "potential,"
"continue," "expects," "anticipates," "intends," "plans," "believes,"
"predicts," "estimates" and similar expressions, although not all
forward-looking statements are identified by these words. These statements
are based on our current beliefs, expectations and assumptions and are
subject to a number of risks and uncertainties. Actual results and events
may vary significantly from those discussed in the forward-looking
statements. A description of risks that could cause our results to vary
appears under the caption "Risk Factors" and elsewhere in this prospectus.
In light of these assumptions, risks and uncertainties, the forward-looking
events discussed in this prospectus may not occur. These cautionary
statements qualify all forward-looking statements attributable to us or
persons acting on our behalf. These forward-looking statements are made as
of the date of this prospectus, and we assume no obligation to update them
even though our situation may change in the future.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed
with the Commission using a "shelf" registration process. Under this shelf
process, the selling stockholders may sell the securities described in this
prospectus in one of more offerings up to a total of 10,810,911 shares.
This prospectus provides you with a description of the securities they may
offer. A prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under
the heading "Where You Can Find More Information About Us."
DESCRIPTION OF CAPITAL STOCK
The following description of our common stock and preferred stock,
together with the additional information included in any applicable
prospectus supplements, summarizes the material terms and provisions of
these types of securities. For the complete terms of our common stock and
preferred stock, please refer to our restated certificate of incorporation
and restated by-laws that are incorporated by reference into the
registration statement which includes this prospectus.
Our authorized capital stock consists of 1,405,000,000 shares. These
shares consist of 1,400,000,000 shares of common stock, par value $0.01 per
share, and 5,000,000 shares of preferred stock, par value $0.01 per share,
of which 250 shares have been designated as Series A preferred stock,
50,000 shares have been designated as Series B preferred stock, 375,000
shares have been designated as Series C preferred stock and 18,090.45
shares have been designated as Series D preferred stock. On August 11,
2000, CMGI had issued and outstanding:
o approximately 296,690,881 shares of common stock;
o no shares of Series A preferred stock;
o no shares of Series B preferred stock;
o 375,000 shares of Series C preferred stock (convertible into an
aggregate of approximately 9,645,997 shares of common stock as of
August 11, 2000); and
o no shares of Series D preferred stock.
COMMON STOCK
Voting Rights. Each holder of common stock is entitled to one vote on
all matters to be voted upon by stockholders for each share held on the
record date for such vote.
Dividends. The holders of common stock, after preferences of holders
of preferred stock, are entitled to receive dividends when, as and if
declared by the board of directors out of funds legally available for
dividends.
Liquidation and Dissolution. If we are liquidated or dissolved, the
holders of the common stock will be entitled to share in our assets
available for distribution to stockholders in proportion to the amount of
common stock they own. The amount available for common stockholders is
calculated after payment of liabilities. Holders of preferred stock will
receive their preferential share of our assets before the holders of the
common stock receive any assets.
Other Rights. Holders of the common stock have no right to:
o convert the common stock into any other security,
o have the common stock redeemed, or
o purchase additional shares of common stock to maintain their
proportionate interest.
The common stock does not have cumulative voting rights, which means
that the holders of a majority of the shares can elect all the directors
and that the holders of the remaining shares will not be able to elect any
directors. All outstanding shares of common stock are, and all shares of
common stock offered under a this prospectus when issued will be upon
payment, validly issued, fully paid and nonassessable.
Restriction on Alienability of Securities to be Registered. The common
stock being registered herein is subject to a Trading Day Limit Agreement
between us and each selling stockholder. Under this agreement, the selling
stockholder can, on any single day on which Nasdaq is open for trading,
sell only up to 10% of the total shares issued to the selling stockholder
upon payment of any of the notes. In addition, the selling stockholder can,
beginning on the date on which the selling stockholder is issued shares
upon payment of any of the notes and ending ten trading days thereafter,
enter into a swap, hedge, collar, short sale or other arrangement that
transfers to another any of the consequences of ownership of those shares
for that period.
Transfer Agent. We have appointed EquiServe, L.P. as the transfer agent
and registrar for our common stock.
PREFERRED STOCK
General. Our restated certificate of incorporation authorizes the
board of directors to issue, without any further action by the
stockholders, the preferred stock in one or more series, to establish from
time to time the number of shares to be included in each series, and to fix
the designation, powers, preferences and rights of the shares of each
series and the qualifications, limitations or restrictions thereof,
including voting rights, dividend rights, conversion rights, liquidation
preferences, redemption privileges and sinking fund terms. The rights,
preferences, privileges and restrictions of the preferred stock of each
series will be fixed by the certificate of designation relating to that
series. Any or all of the rights of the preferred stock may be greater than
the rights of the common stock.
In addition, the preferred stock could have other rights, including
economic rights senior to our common stock, so that the issuance of the
preferred stock could adversely affect the market value of our common
stock. The issuance of the preferred stock may also have the effect of
delaying, deferring or preventing a change in control of us without any
action by the stockholders.
SERIES C PREFERRED STOCK
Voting Rights. Holders of shares of Series C preferred stock have no
voting rights except as otherwise provided by the Delaware corporation
statute and our restated certificate of incorporation. On such matters
where the holders of shares of Series C preferred stock have a right to
vote with the holders of common stock, they are entitled to vote their
shares on an as-converted basis. Our restated certificate of incorporation
also gives the holders of shares of Series C preferred stock the right to
vote on enumerated actions that if taken by us would impair their rights,
preferences and privileges. Prior to us taking any such action, the
affirmative vote of the holders of a majority of the outstanding shares of
Series C preferred stock is required.
Dividend Rights. Holders of Series C convertible preferred stock are
entitled to receive when, as and if declared by the board of directors, out
of funds legally available for dividends, cumulative dividends equal to two
percent per annum of the stated value of $1,000 per share, payable
semiannually in arrears, either in cash or, at our option, through an
adjustment to the liquidation preference per share. Such adjustments, if
any, will also increase the number of shares of common stock into which
shares of Series C preferred stock is convertible.
Liquidation and Dissolution. In the event of any liquidation or
dissolution of us, the holders of Series C preferred stock are entitled to
receive, prior to any distribution to holders of common stock, an amount
equal to the stated value of $1,000 per share plus all adjustments to the
liquidation preference plus accrued but unpaid dividends to which no
adjustment has been made (the sum of which is referred to as the
liquidation preference).
Our restated certificate of incorporation specifies that upon the
occurrence of enumerated corporate events, including the consummation of a
transaction in which our stockholders do not own at least 50% of the voting
power of the combined company, the holders of two-thirds of the outstanding
shares of Series C preferred stock may elect either:
o to treat such events as a liquidation event and receive a
liquidation distribution; or
o to have the conversion price for each share of Series C preferred
stock adjusted accordingly.
Conversion. The shares of Series C preferred stock are segregated into
three equal tranches of 125,000 shares each. The shares in each tranche
have identical rights and preferences except as to conversion. The
conversion price calculated for each tranche is also subject to adjustment
for certain actions described in our restated certificate of incorporation.
Shares of Series C preferred stock may be converted into common stock at
any time at the option of the holders and automatically convert into common
stock on June 30, 2002, as described in the restated certificate of
incorporation.
The restated certificate of incorporation provides that a holder of
Series C preferred stock may not choose to convert such shares into common
stock totaling more than 9.9% of outstanding shares of common stock.
Redemption Rights. Holders of shares of Series C preferred stock have
the right to cause us to redeem their shares upon the occurrence of events
specified in our restated certificate of incorporation, including our
failure to issue shares of common stock upon conversion by holders of
shares of Series C preferred stock. The redemption price will be an stock
demanding redemption.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
We have shares of common stock and preferred stock available for
future issuance without stockholder approval. These additional shares may
be utilized for a variety of corporate purposes, including future public
offerings to raise additional capital, facilitate corporate acquisitions or
payable as a dividend on the capital stock.
The existence of unissued and unreserved common stock and
preferred stock may enable the board of directors to issue shares to
persons friendly to current management or to issue preferred stock with
terms that could render more difficult or discourage an attempt to obtain
control of us by means of a merger, tender offer, proxy contest or
otherwise, thereby protecting the continuity of our management. In
addition, the issuance of preferred stock could adversely affect the voting
power of holders of common stock and the likelihood that such holders will
receive dividend payments and payments upon liquidation.
CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION AND THE
RESTATED BY-LAWS
Our restated certificate of incorporation and restated by-laws include
provisions that could make it more difficult to acquire us by means of a
merger, tender offer, proxy contest or otherwise. These provisions, as
described below, are expected to discourage certain types of coercive
takeover practices and inadequate takeover bids and to encourage persons
seeking to acquire control of us first to negotiate with us. We believe
that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure us outweigh the disadvantages of discouraging such
proposals because, among other things, negotiations with respect to such
proposals could result in terms more favorable to us.
Our restated certificate of incorporation and restated by-laws provide
that the board of directors will be divided into three classes of
directors, with the term of each class expiring in a different year. Our
restated by-laws provide that the number of directors will be fixed from
time to time exclusively by the board of directors, but shall consist of
not more than fifteen nor less than three directors. A majority of the
board of directors then in office has the sole authority to fill any
vacancies on the board of directors. Our restated certificate of
incorporation provides that directors may be removed only by the
affirmative vote of holders of at least 75% of the voting power of all of
the then outstanding shares of stock entitled to vote generally in the
election of directors, voting together as a single class.
Our restated certificate of incorporation provides that stockholder
action can be taken only at an annual or special meeting of stockholders
and prohibits stockholder action by written consent in lieu of a meeting.
Our restated certificate of incorporation and restated by-laws provide that
special meetings of stockholders can be called by the chairman of the board
of directors, or pursuant to a resolution approved by a majority of the
total number of directors which we would have if there were no vacancies on
the board of directors, or by the stockholders owning at least 20% of the
stock entitled to vote at the meeting. The business permitted to be
conducted at any special meeting of stockholders is limited to the business
brought before the meeting by the chairman of the board, or at the request
of a majority of the whole board of directors, or as specified in the
stockholders' call for such meeting.
Our restated by-laws set forth an advance notice procedure with regard
to the nomination, other than by or at the direction of the board of
directors, of candidates for election to the board of directors and with
regard to business brought before an annual meeting of stockholders.
Our restated certificate of incorporation and restated by-laws contain
provisions requiring the affirmative vote of the holders of at least 75% of
the voting stock, voting together as a single class, to amend certain
provisions of the restated certificate of incorporation relating primarily
to anti-takeover provisions and to the limitation of director liability.
The restated certificate of incorporation empowers the board of
directors, when considering a tender offer or merger or acquisition
proposal, to take into account factors in addition to potential economic
benefits to stockholders. Such factors may include:
o comparison of the proposed consideration to be received by
stockholders in relation to the then current market price of the
capital stock, our estimated current value in a freely negotiated
transaction, and our estimated future value as an independent
entity;
o the impact of such a transaction on ou customers and employees,
and its effect on the communities in which we operate; and
o our ability to fulfill our objectives under applicable statutes
and regulations.
Our restated certificate of incorporation prohibits us from purchasing
any shares of our stock from any person, entity or group that beneficially
owns 5% or more of our voting stock at a price exceeding the average
closing price for the twenty trading business days prior to the purchase
date, unless a majority of our disinterested stockholders approve the
transaction. This restriction on purchases by us does not apply to any
offer to purchase shares of a class of our stock which is made on the same
terms and conditions to all holders of that class of stock, to any purchase
of stock owned by such a 5% stockholder occurring more than two years after
such stockholder's last acquisition of our stock, to any purchase of our
stock in accordance with the terms of any stock option or employee benefit
plan, or to any purchase at prevailing market prices pursuant to a stock
purchase program.
Our restated certificate of incorporation contains a provision
requiring the affirmative vote of the holders of at least 75% of the voting
stock, voting together as a single class, to approve any business
combination not approved by the affirmative vote of a majority of the total
number of directors. This requirement is in addition to the requirements of
Section 203 of the Delaware General Corporation Law.
CMGI, INC.
CMGI develops and operates Internet and fulfillment services
companies. CMGI is a Delaware corporation. CMGI previously operated under
the name CMG Information Services, Inc.leading global Internet company. Our strategy is to create
or acquire, and was incorporated in 1986.
CMGI's Internet strategy includes the internal development and
operation of majority-owned subsidiaries as well as taking strategic
positions in other Internetthen operate, companies that have demonstrated synergies with
CMGI's core businesses. CMGI's strategy also envisions and promotes
opportunities for synergistic business relationships among the companies
within its portfolio. At July 31, 1999, CMGI's majority owned Internet
subsidiaries included Activerse Inc., Adsmart Corporation, Blaxxun
Interactive, Inc., CMGI Solutions, Inc., Engage Technologies, Inc., iCAST
Corporation, Magnitude Network, Inc., MyWay.com (formerly Planet Direct
Corporation), Nascent Technologies, Inc., NaviNet, Inc., NaviSite, Inc.,
Netwright, LLC and ZineZone Corporation. Activerse provides open standard
Internet messaging technologies; Adsmart is an online advertising network,
providingcan fulfill our vision of a
comprehensive set of services to advertisers and Web
publishers; Blaxxun develops and markets software for Internet multimedia
communication; CMGI Solutions and Netwright are technology consulting
units; Engage Technologies, which completed its IPO in July 1999, is a
provider of profile-based Internet marketing solutions; iCAST was formed to
provide both original and syndicated video and audiopersonalized, content and provide anservice-rich Internet that is easy to use and
accessible globally. We focus on four key areas of the Internet from both a
business-to-business and business-to-consumer perspective:
o interactive entertainment environment; Magnitude Network provides radio
stations with integration of radiomarketing and the Internet; MyWay.com provides a
Web portal that can be personalized to an individual user's locality,
interests,advertising solutions;
o enabling tools and preferences,infrastructure technologies;
o content and customized for distribution affiliates;
Nascent is a developer of value-added, carrier-access software that enables
service providers to rapidly launch new services on the World Wide Web;
NaviNet, an Internet Access Provider, offers a high-availability national
network service for ISPs that want to expand their coverage, capacity, and
capabilities through outsourcing; NaviSite, which completed its IPO in
October 1999, specializes in e-business outsourcing solutions, including
high-end Web hosting and Internet application hosting, monitoring, and
management; and ZineZone is a network for people who are avid embracers and
early adopters of new forms of entertainment, leisure and technology.
CMGI maintains investments in three venture funds:
o CMG@Ventures I, LLC;
o CMG@Ventures II, LLC;community; and
o CMG@Ventures III, LLC.
CMGI owns 100%e-commerce.
We believe that our network of over 75 operating and venture companies
benefit from CMGI's operational expertise, strategic guidance and
resources. They also benefit from the capitalexchange of experiences and is entitledbest
practices with each other. We foster a collaborative environment that
encourages a sharing of ideas among our companies. We also facilitate
intra-network relationships and seek to 77.5%leverage our strategic partners to
80% of
the net capital gains of these three funds.
CMGI provides fulfillment services through three wholly owned
subsidiaries, SalesLink Corporation, InSolutions Incorporated and On-Demand
Solutions, Inc. SalesLink's services are also provided through its
subsidiary, Pacific Direct Marketing Corporation. CMGI's fulfillment
services offerings include product and literature fulfillment, supply chain
management, telemarketing, and outsourced e-business program management. In
May 1999, CMGI completed the sale of its subsidiary, CMG Direct Corporation
to Marketing Services Group, Inc. At the time, CMG Direct comprised the
Company's lists and database services segment.
During the first quarter of fiscal year 2000, CMGI completed the
acquisitions of AltaVista Company and Signatures Network, Inc. and
announced definitive agreements to acquire AdForce, Inc., AdKnowledge Inc.,
and Flycast Communications Corporation. The AdForce, AdKnowledge and
Flycast acquisitions are subject to customary conditions, including
regulatory approval and target company shareholder approval. AltaVista is
an online media and commerce network that integrates Internet technology
and services to deliver fast, relevant results for both individuals and
Web-based businesses; Signatures Network is a music and celebrity licensing
and event merchandising company; AdForce is a provider of centralized
online advertising services; AdKnowledge, which will become a wholly owned
subsidiary of Engage Technologies, is a provider of complete Web marketing
management services focused entirely on the needs of on line marketers and
agencies; and Flycast is a provider of Web-based direct response
advertising solutions to advertisers.
CMGI has adopted a strategy of seeking opportunities to realize
gains through the selective sale of investments or having separate
subsidiaries or affiliates sell minority interests to outside investors.
CMGI believes that this strategy provides the ability to increase
stockholder value as well as provide capital to supportaccelerate the growth in
CMGI's subsidiariesof our network companies. We believe that our network
of companies provides us with insights into emerging market needs and
investments. CMGI expectsposition us to continue to develop
and refinebe a driving force behind the products and servicesevolution of its businesses, with the
goal of
increasing revenue as new products are commercially introduced and to
continue to pursue the acquisition of or the investment in, additional
Internet and fulfilment service companies.Internet.
Our principal executive office is located at 100 Brickstone Square,
Andover, Massachusetts 01810 and our telephone number is (978) 684-3600.
References in this prospectus to our Web site address or those of our
network companies are textual references only. The information contained on
these Web sites is not a part of this prospectus supplement.
CMGI, CMGI Solutions, CMGion, @Ventures, CMGI Creating Net Value,
Creating Net Value and Worldwide Points are our servicemarks or those of
our subsidiaries. This prospectus also contains other trademarks,
servicemarks and trade names that are the property of our network companies
or other parties.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of
common stock being sold by the selling stockholders pursuant to this
prospectus. The selling stockholders will receive all of the net proceeds
from any sale of the shares of common stock being sold by the selling
stockholders pursuant to this prospectus.
The selling stockholders will pay any underwriting discounts and
commissions and expenses incurred by the selling stockholders for
brokerage, accounting, tax or legal services or any other expenses incurred
by the selling stockholders in disposing of the shares. We will bear all
other costs, fees and expenses incurred in effecting the registration of
the shares covered by this prospectus, including, without limitation, all
registration and filing fees, Nasdaq listing fees and fees and expenses of
our counsel and our accountants.
THE SELLING STOCKHOLDERS
The sellingconsideration paid to the former stockholders are investorsof Tallan, Inc.
for our purchase of a controlling interest in Tallan, Inc. on March 31,
2000 included three promissory notes. One note, in the Series C Convertible
Preferred Stock. Theprincipal amount of
$241,794,649.00, matures on September 30, 2000 and two notes, in the
aggregate principal amount of $135,101,879.00, mature on December 31, 2000.
Each promissory note allows us to extend the maturity date by up to 30
days. We have the option, on or before maturity of the notes, of paying
some or all of the principal and interest owed on the notes in our common
stock. We put these notes in escrow on behalf of the former Tallan, Inc.
stockholders, pending payment on or before maturity of the notes and, in
the case of one of the notes maturing on December 31, 2000 in the principal
amount of $50,000,000.00, the resolution of indemnification claims, if any.
This prospectus registers for resale by the former stockholders of Tallan,
Inc. the shares of our common stock offered hereby are issuable to
the selling stockholdersthat we may issue upon conversionrepayment of
shares of the Series C
Convertible Preferred Stock held by such selling stockholders. As of
November 1, 1999, the 375,000 shares of Series C Convertible Preferred
Stock would be initially convertible into 4,722,215 shares of common stock.these notes.
The following table sets forth, as of November 1, 1999,to our knowledge, the name of
each selling stockholder, theand
number of shares of our common stock beneficially owned by each of the
selling stockholderstockholders. Beneficial ownership is determined in accordance with
the rules of the SEC, and the number of sharesincludes voting or investment power with respect
to shares. Shares of common stock which may be sold from timeissuable under stock options that are
exercisable within 60 days after August [ ], 2000 are deemed outstanding
for computing the percentage ownership of the person holding the options
but are not deemed outstanding for computing the percentage ownership of
any other person. Unless otherwise indicated below, to time by such selling
stockholder pursuant to this prospectus. Except as described below, each
selling stockholder hasour knowledge, all
persons named in the table have sole voting and investment power with
respect to thetheir shares of common stock, set forthexcept to the extent authority is
shared by spouses under applicable law. The inclusion of any shares in this
table does not constitute an admission of beneficial ownership for the
table.person named below. The table has been prepared on the basis of the
information furnished to us by or on behalf of each of the selling stockholders. As
of November 15, 1999,August 11, 2000 there were approximately 118,669,438296,690,881 shares of ourCMGI
common stock outstanding.
NUMBER OF SHARES NUMBER OF
SHARES OF NUMBER COMMON STOCK
COMMON STOCK OF COMMON STOCKSHARES TO BE BENEFICIALLY
OWNED PRIOR TO TO BEBEING OWNED AFTER THE
SELLING STOCKHOLDERS THIS OFFERING REGISTERED HEREBY(1)(1) OFFERED OFFERING (1)
- -------------------- ---------------- --------------------------- ------------
Number Percent Number Percent
------ ------- ------ -------
Wingate Capital Ltd.
Mary Abel
Peter A. Bourdon (2)
762,051 720,164
Fisher Capital Ltd.Canaan Equity
Stephen Clune (2)
1,191,913 1,126,394
Westgate International, L.P.(3) 521,581 549,252Christopher Dearing (2)
Philip Filippelli (2)
James C. Furnivall
R. Nelson Griebel
Gregory P. Hughes
John M. Hughes (2)
Michael Hughes (2)
Robert Hughes (2)
J.B. Ventures LLC
J.H. Whitney III, LP
(J.H.) Whitney Strategic Partners III, LP
Gregory Kopchinsky
Michael R. Lezenski (2)
Bernard Lidestri (2)
Michael A. Logan (2)
Michael Lydon (2)
Eugene McKeown (2)
Earl Mix
Morgan Stanley Venture Partners III, LP
Morgan Stanley Venture Investors III, LP
Morgan Stanley Venture Partners
Entrepreneur Fund, LP
Laurie A. Paternoster (2)
Christopher Reeves Paralysis
Foundation
Regency One LLC
Doug Rivard (2)
Gary St. Jean (2)
David Tanacea (2)
Kevin Williamson (2)
Eric A. Young
The Liverpool Limited Partnership(3) 521,581 549,252
Leonardo, L.P. 1,048,298 1,113,191
AGR Halifax Fund, Ltd. 36,992 39,281
Harbourton Enterprises 61,648 65,466
Surfside Investment Company 12,335 13,098
RGC International Investors, LDC(4) 2,022,468 662,867
Halifax Fund, L.P.(5) 125,914 132,532
(1)Ryan Anderson Young
Irrevocable Trust DTD 7/28/95
The shares of common stock to be registered hereby are calculated
assuming thatConnor Erickson Young
Irrevocable Trust DTD 2/11/98
(1) We do not know when or in what amounts a selling stockholder may
offer shares for sale. The selling stockholders may sell any or
all of the shares of Series C Convertible Preferred Stock
are converted immediately prior to the maturity date at the applicable
tranche conversion price as of November 1, 1999 described in the "Plan
of Distribution -- Terms of the Series C Convertible Preferred Stock,"
plus the maximum number of shares of common stock as of November 1,
1999 which CMGI would be obligated to issue as dividends if it elected
to make each semiannual dividend payment through an adjustment to the
liquidation preference per share of the Series C Convertible Preferred
Stock. The actual number of shares of common stock offered hereby and
included in the Registration Statement of which this prospectus forms a
part includes, pursuant to Rule 416 under the Securities Act, such
additional number of shares of common stock which may be issuable upon
conversion of the Series C Convertible Preferred Stock to prevent
dilution resulting from stock splits, stock dividends or similar
transactions.
(2) Citadel Limited Partnership is the trading manager of each of Wingate
Capital Ltd. and Fisher Capital Ltd. the (the "Citadel Entities") and
consequently has voting control and investment discretion over
securities held by the Citadel Entities. The ownership for each of the
Citadel Entities does not include the ownership information for the
other Citadel Entity. Citadel Limited Partnership and each of the
Citadel Entities each disclaims beneficial ownership of the securities
held by the other Citadel Entities. The number of shares of common
stock listed as being beneficially owned by Wingate Capital Ltd.
includes, as of November 1, 1999, 78,000 shares of common stock and the
number of shares of common stock listed as being beneficially owned by
Fisher Capital Ltd. includes, as of November 1, 1999, 122,000 shares of
common stock.
(3) Westgate International, L.P. shares voting and investment power with
its investment manager, Martley International, Inc. ("Martley"). The
Liverpool Limited Partnership is managed by an affiliate of Martley.
Each of Westgate International, L.P. and The Liverpool Limited
Partnership disclaim any beneficial ownership interest in the other's
shares.
(4) The shares of common stock beneficially held include 1,392,771 shares
of common stock issuable upon conversion of CMGI's Series B Convertible
Preferred Stock held by RGC International Investors, LDC.
(5) The investment manager of Halifax Fund, L.P. is the Palladin Group,
L.P. with which it shares investment and voting power.
Pursuant to the terms of the Certificate of Designations,
Preferences and Rights governing the Series C Convertible Preferred Stock,
the shares of Series C Convertible Preferred Stock are convertibleoffered by a
holder of such stock only to the extent that the number of shares of common
stock initially issuable upon such conversion, together with the number of
shares of common stock already owned by such holder and its affiliates (but
not including shares of common stock underlying unconverted shares of the
Series C Convertible Preferred Stock or shares of CMGI's Series B
Convertible Preferred Stock held by such holder and its affiliates) would
not exceed (x) 4.9% of the then outstanding shares of common stock with
respect to any shares of Series C Convertible Preferred Stock which are
held by any person which also holds shares of CMGI's Series B Convertible
Preferred Stock and (y) 9.9% of the then outstanding shares of common stock
with respect to any shares of Series C Convertible Preferred Stock which
are held by any person which does not also hold any shares of CMGI's Series
B Convertible Preferred Stock. CMGI's Series B Convertible Preferred Stock
has a similar 4.9% limitation.
Except as described in the next sentence, none of the selling
stockholders listed above has, or within the past three years has had, any
position, office or other material relationship with us or any of our
predecessors or affiliates. William H. Berkman, a member of our Board of
Directors, is a partner in an entity that has a passive limited partnership
interest in the majority shareholder of RGC International Investors, LDC.
Mr. Berkman's interest represents less than 1% of the limited partnership
interests in such shareholder.this prospectus. Because the selling
stockholders may offer all or some portion of the above referenced securitiesshares pursuant to this
prospectus or otherwise, nooffering, we cannot estimate can be given as to the amount or
percentagenumber of such securitiesthe shares that will be
held by the selling stockholders uponafter completion of the offering.
The common stock being registered is subject to a Trading Day
Limit Agreement which restricts the amount of shares any such sale.selling
stockholder can sell in one day and which provides a limited time
window in which the selling stockholder can enter into an
arrangement that transfers to another any of the consequences of
ownership of those shares. For purposes of this table, we have
assumed that, after completion of the offering, none of the shares
covered by this prospectus will be held by the selling
stockholders.
(2) Except for those individuals designated by reference to this
footnote, none of the selling stockholders has held any position
or office with, or has otherwise had a material relationship with,
us, Tallan, and/or any of our other subsidiaries within the past
three years, except that the selling stockholders indicated have
been employed by us and/or Tallan.
PLAN OF DISTRIBUTION
The consideration paid to the former stockholders of Tallan, Inc.
for our purchase of a controlling interest in Tallan, Inc. on March 31,
2000 included three promissory notes. One note, in the principal amount of
$241,794,649.00, matures on September 30, 2000 and two notes, in the
aggregate principal amount of $135,101,879.00, mature on December 31, 2000.
Each promissory note allows us to extend the maturity date by up to 30
days. We have the option, on or before the maturity of the notes, of paying
some or all of the principal and interest owed on the notes in our common
stock. We put these notes in escrow on behalf of the former Tallan, Inc.
stockholders, pending payment on or before maturity and, in the case of one
of the notes maturing on December 31, 2000 in the principal amount of
$50,000,000.00, the resolution of indemnification claims, if any. Upon
payment of the note maturing on December 31, 2000 in the principal amount
of $50,000,000.00, shares of our common stock equal in value to any
indemnification claims then pending will remain in escrow until those
claims are resolved. Additionally, common stock issued in payment of all
three notes is subject to a Trading Day Limit Agreement between us and the
selling stockholders. Under this agreement, the selling stockholder can, on
any single day on which Nasdaq is open for trading, sell only up to 10% of
the total shares issued to the selling stockholder upon payment of any of
the notes. In addition, the selling stockholders
identified above may have sold, transferred or otherwise disposedstockholder can, beginning on the date
on which the selling stockholder is issued shares upon payment of all or
a portion of such securities since November 1, 1999 in transactions exempt
from the registration requirementsany of
the Securities Act. The selling
stockholders may sell all, partnotes and ending ten trading days thereafter, enter into a swap, hedge,
collar, short sale or noneother arrangement that transfers to another any of
the securities listed above.
Generally, only selling stockholders identified in the foregoing
table who beneficially own theconsequences of ownership of those shares of common stock set forth opposite
their respective names may sell such offered shares pursuant to the
Registration Statement of which this prospectus forms a part. We may from
time to time include additional selling stockholders in supplements to this
prospectus.
PLAN OF DISTRIBUTION
We previously issued and sold an aggregate of 375,000 shares of our
Series C Convertible Preferred Stock to the selling stockholders in a
private transaction in exchange for $375 million.that period. This
prospectus relates to the offer and saleresale of the shares of our common
stock described herein by the selling stockholders.
For purposes hereof, the term "selling stockholders" includes
donees, pledgees, distributees, transferees or other
successors-in-interest, including, without limitation, their respective
affiliates and limited or general partners, all of which are referred to be received by suchas
a group below as transferees, or certain counterparties to derivatives
transactions with the selling stockholders whenor transferees. The selling
stockholders will act independently of us in making decisions with respect
to the timing, manner and size of each sale.
The selling stockholders may sell the shares of Series C Convertible Preferred
Stock are converted. The shares of common stock offered hereby may be sold from
time to time, by the selling stockholders, or by their pledgees,
donees, distributees, transferees or other successors in interest.
TERMS OF THE SERIES C CONVERTIBLE PREFERRED STOCK
The following is a brief description of some of the terms of the
Series C Convertible Preferred Stock. For a more detailed description of
the rights and preferences of the Series C Convertible Preferred Stock
prospective investors are directedsubject to the Certificate of Designations,
Preferences and Rights of the Series C Convertible Preferred Stock and the
Certificate of Correction in respect thereto which have been filed with the
Secretary of State of the State of Delaware and which are incorporated
herein by reference.
The Certificate of Designation separates the 375,000 shares of
Series C Convertible Preferred Stock into three separate tranches of
125,000 shares each designated as "tranche 1," "tranche 2," and "tranche
3." The shares in each tranche have identical rights and preferences to
shares in the other tranches, except as to conversion price as set forth
below. CMGI will pay a semiannual dividend on the Series C Convertible
Preferred Stock of 2% per annum, in arrears, on June 30 and December 30 of
each year beginning on December 30, 1999, in cash or, at CMGI's option,
through an adjustment to the liquidation preference per share of the Series
C Convertible Preferred Stock. Such adjustments, if any, will also increase
the number of shares of common stock into which the Series C Convertible
Preferred Stock is convertible.
Each tranche of the Series C Convertible Preferred Stock has a
separate conversion price: tranche 1 shares have a conversion price of
$91.43 per share; tranche 2 shares have a conversion price of $75.15 per
share; and tranche 3 shares have a conversion price of $75.32 per share.
The conversion price for each tranche is subject to adjustment for certain
actions taken by CMGI as more fully explained in the Certificate of
Designation. The Series C Convertible Preferred Stock may be converted into
common stock by the holders at any time and automatically converts into
common stock on June 30, 2002. Subject to certain limitations, the shares
of Series C Convertible Preferred Stock can be converted into shares of
common stock by the holders at any time by taking the $1,000 per share
initial stated value of such shares of Series C Convertible Preferred
Stock, adding to such initial stated value per share any completed or
accrued dividend adjustments to the liquidation preference per share of the
Series C Convertible Preferred Stock as set forth above, and dividing such
sum by the applicable tranche conversion price. On June 30, 2002, any
outstanding shares of Series C Convertible Preferred Stock automatically
convert into common stock at a conversion price equal to the average of the
closing bid prices of the common stock on the ten consecutive trading days
ending on the trading day prior to June 30, 2002.
The Series C Convertible Preferred Stock is redeemable at the
option of the holders upon the occurrence of certain events.
MANNER OF DISTRIBUTION OF COMMON STOCK ACQUIRED UPON CONVERSION OF SERIES C
CONVERTIBLE PREFERRED STOCK
The selling stockholders or their respective pledgees, donees,
transferees or other successors in interest may sell the shares of common
stock offered hereby by delivery of this prospectus from time to timeTrading Day Limit Agreement, in one or more
transactions (which may involve block transactions) on the
Nasdaq National Market or on suchany
other market on which our common stock may from time to time be trading, may sellin
privately-negotiated transactions, through the writing of options on the
shares, offered hereby in
privately negotiated transactions, may sell shares of common stock short
and (if such short sales were effected pursuant hereto and a copy of this
prospectus delivered therewith) deliver the shares offered hereby to close
out such transactions, may engage in the sale of such shares through
equity-swaps or the purchase or sale of options, may pledge the shares
offered hereby to a broker or dealer or other financial institution, and
upon default, the broker or dealer may effect sales of the pledged shares
by delivery of this prospectus or as otherwise described herein or any combination thereof. The sale price to the
public may be the market price for our common stock prevailing at the time
of sale, a price related to such prevailing market price, at negotiated
prices or such other price as the selling stockholders determine from time
to time. The shares offered
hereby may also be sold pursuant to Rule 144 under the
Securities Act
without delivery of this prospectus.Act. The selling stockholders shallwill have the sole discretion not
to accept any purchase offer or make any sale of shares if they deem the
purchase price to be unsatisfactory at any particular time.
The selling stockholders or their respective pledgees, donees,
transferees or other successors in interest may also sell the shares, subject to the
Trading Day Limit Agreement, directly to market makers acting as principals
and/or broker-dealers acting as agents for themselves or their customers.
Such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). Market makers
and block purchasers purchasing the shares will do so for their own account
and at their own risk. It is possible that a selling stockholder will
attempt to sell shares of common stock in block transactions to market
makers or other purchasers at a price per share which may be below the then
market price. There can be no assurance that all or any part of the shares
offered hereby will be issued to, or sold by, the selling stockholders. The
selling stockholders and any brokers, dealers, or agents, upon effecting
the sale of any of the shares offered hereby, may be deemed "underwriters"
as that term is defined under the Securities Act or the Securities Exchange Act, of 1934, as amended, or
the rules and regulations promulgated thereunder.
The selling stockholders may enter into hedging transactions with
broker-dealers with respect to the shares in accordance with the terms of
the Trading Day Limit Agreement. In connection with these transactions,
broker- dealers may engage in short sales of the shares in the course of
hedging the positions they assume with the selling stockholders. The
selling stockholders may also sell the shares short and redeliver the
shares to close out the short positions. The selling stockholders may also
enter into option or other transactions with broker-dealers which require
the delivery to the broker-dealer of the shares. The selling stockholders
may also loan or pledge the shares to a financial institution or a
broker-dealer and the financial institution or the broker-dealer may sell
the shares loaned or upon a default the financial institution or the
broker-dealer may effect sales of the pledged shares.
The selling stockholders, alternatively, may sell all or any part
of the shares, subject to the Trading Day Limit Agreement, offered hereby
through an underwriter. No selling stockholder has entered into any
agreement with a prospective underwriter and there is no assurance that any
such agreement will be entered into. If a selling stockholder enters into
such an agreement or agreements, the relevant details will be set forth in
a supplement or revisionsrevision to this prospectus.
To the extent required, we will amend or supplement this
prospectus to disclose material arrangements regarding the plan of
distribution.
To comply with the securities laws of certain jurisdictions, the
shares offered by this prospectus may need to be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers.
Under applicable rules and regulations promulgated under the Securities
Exchange Act of 1934, any person engaged in a distribution of the shares of
common stock covered by this prospectus may be limited in itstheir ability to
engage in market activities with respect to such shares. The selling
stockholders, for example, will be subject to the applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder,under it,
including, without limitation, Regulation M, which provisions may restrict
certain activities of the selling stockholders and limit the timing of
purchases and sales of any shares of common stock by the selling
stockholders.stockholder. Furthermore, under Regulation M, persons engaged in a
distribution of securities are prohibited from simultaneously engaging in
market making and certain other activities with respect to such securities
for a specified period of time prior to the commencement of such
distributions, subject to specified exceptions or exemptions. The foregoing
may affect the marketability of the shares offered by this prospectus.
We have agreed to pay certain expenses of the offering and
issuance of the shares of common stock covered by this prospectus, including the printing,
legal and accounting expenses we incur and the registration and filing fees
imposed by the Commission and the Nasdaq National Market. The
selling stockholders will be indemnified by CMGI against certain civil
liabilities, including certain liabilities under the Securities Act,SEC or will be entitled to contribution in connection therewith. CMGI will be
indemnified by the selling stockholders against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled
to contribution in connection therewith.
Upon a sale of common stock pursuant to this Registration Statement
of which this prospectus forms a part, the common stock will be freely
tradable in the hands of persons other than affiliates of CMGI.Nasdaq. We will not pay brokerage commissions or
taxes associated with sales by the selling stockholders.
The selling stockholders have agreed to suspend sales upon
notification that certain actions, such as amending or supplementingWe will not terminate the Registration Statement of which this
prospectus are requiredconstitutes a part prior to March 31, 2000, except in orderthe event
that all of the shares covered by this prospectus have been disposed of
pursuant to complyand in accordance with federal or state
securities laws.the Registration Statement.
LEGAL MATTERS
The validity of the issuance of the common stock covered by this
prospectus will be passed upon for CMGI by Skadden, Arps, Slate, Meagher &
Flom LLP, New York, New York, specialBoston, Massachusetts, counsel for CMGI in this transaction.
EXPERTS
TheOur consolidated financial statements of CMGI as of July 31, 1999 and
1998, and for each of the years in the three-year period ended July 31,
1999 have been incorporated by reference herein and in the Registration
Statementregistration
statement in reliance upon the report of KPMG LLP, independent certified
public accountants, incorporated by reference herein, and upon authority of
said firm as experts in accounting and auditing.
The financial statements of Flycast Communications Corporation as
of December 31, 1999 and for the year then ended, have been incorporated by
reference herein and in the registration statement in reliance on the
report of KPMG LLP, independent certified public accountants, incorporated
by reference herein, and upon authority of said firm as experts in
accounting and auditing.
The financial statements of AdForce, Inc. as of December 31, 1999
and for the year then ended, have been incorporated by reference herein and
in the registration statement in reliance on the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein,
and upon authority of said firm as experts in accounting and auditing.
The financial statements of AltaVista Company as of December 31,
1997 and 1998 and for each of the two years in the three-year period ended December
31, 1997, and for the period from January 1, 1998 through June 11, 1998 and
for the period from June 12, 1998 through December 31, 1998, the financial
statements of Zip2 as of December 31, 1997 and 1998, and for each of the
three years in the three-year period ended December 31, 1998, and the financial
statements of Shopping.com as of January 31, 1998 and 1999 and for each of
the two years in the two-year period ended January 31, 1999, incorporated in this
prospectus by reference to the CMGI, Inc. Current Report on Form 8-K dated
June 29, 1999 have been so incorporated by
reference herein in reliance uponon the reports of
PricewaterhouseCoopers LLP, independent accountants, given upon the
authority of said firm as experts in auditing and accounting. The financial
statements of Shopping.com as of the year ended January 31, 1997, have been
incorporated by reference herein in reliance upon the report of Singer
Lewak Greenbaum & Goldstein LLP, independent certified public accountants,
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Flycast Communications
Corporation as of December 31, 1997 and 1998 and for each of the years in
the three-year period ended December 31, 1998, incorporated by reference
herein, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report which is incorporated by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated balance sheets of yesmail as of December 31, 1998
and 1999, and the related consolidated statements of operations,
stockholders' (deficit) equity and cash flows for each of the years in the
two- year period ended December 31, 1999, have been incorporated by
reference herein and have been audited by Arthur Andersen LLP, independent
certified public accountants, as indicated in their reports with respect
thereto, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said report.
The financial statements of Tallan, Inc. as of December 31, 1998
and 1999 and for each of the three years in the period ended December 31,
1999 incorporated in this prospectus by reference to the CMGI, Inc. Current
Report on Form 8-K dated March 9, 2000 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given upon the authority of said firm as experts in auditing
and accounting.
Ernst & Young LLP, independent auditors, have audited the
consolidated financial statements of AdForce, Inc. at December 31, 1997 and
1998, for the years ended December 31, 1998 and 1997 and for the period
from January 16, 1996 (inception) to December 31, 1996 (not presented
separately herein), as set forth in their report, which is included as an
exhibit to this prospectus and registration statement. AdForce's financial
statements are included as an exhibit in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the
financial statements of uBid, Inc.at December 31, 1998 and 1999 and for the
period from April 1, 1997 (inception) to December 31, 1997 and for the
years ended December 31, 1998 and 1999, included in the Amendment No. 1 to
the CMGI, Inc. Registration Statement on Form S-4 filed on March 27, 2000,
as set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. The financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements,
information statements and other information with the Commission. You can
inspect and copy any such information we file with the Commission at the
public reference facilities the Commission maintains at:
Room 1024, Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
and at the SEC's Regional Offices located at:
Suite 1400, Northwestern Atrium Center
500 West Madison Street
Chicago, Illinois 60661
and
13th Floor, Seven World Trade Center
New York, New York 10048
and you may also obtain copies of such material by mail, at prescribed
rates, from the Public Reference Section of the Commission at:
450 Fifth Street, N.W.
Washington, D.C. 20549
at prescribed rates.
Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms.
The Commission also maintains a Web site on the World Wide Web, the
address of which is http://www.sec.gov. That site also contains our annual,
quarterly and special reports, proxy statements, information statements and
other information.
Our annual, quarterly and special reports, proxy
statements, information statements and other information concerning CMGI
may also be inspected at the offices of the Nasdaq Stock Market, Reports
Section, at:
1735 K Street, N.W.
Washington, D.C. 20006.
This prospectus is part of a Registration Statementregistration statement filed by us
with the Commission. It does not contain all the information included or
incorporated by reference in the Registration Statement.registration statement. The full
Registration Statementregistration statement can be obtained from the Commission as indicated
above or from us.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" information
from other documents that we file with them, which means that we can
disclose important information to you by referring to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and information that we file later with the Commission will
automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with
the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the sale of all the shares of common stock covered by this
prospectus:
o Annual Report on Form 10-K for the fiscal year ended July
31, 1999, filed with the Commission on October 29, 1999;
o Quarterly Report on Form 10-Q for the fiscal quarter ended
October 31, 1999, filed with the Commission on December 15,
1999;
o Quarterly Report on Form 10-Q for the fiscal quarter ended
January 31, 2000, filed with the Commission on March 16,
2000;
o Quarterly Report on Form 10-Q for the fiscal quarter ended
April 30, 2000, filed with the Commission on June 14, 2000,
as amended by the Quarterly Report on Form 10-Q/A filed with
the Commission on July 11, 2000;
o Current Report on Form 8-K (June 29, 1999) filed with the
Commission on August 12, 1999;
o Current Report on Form 8-K (August 18, 1999) filed with the
Commission on September 2, 1999, as amended by the Current
ReportReports on Form 8-K/A (August 18, 1999) filed with the
Commission on November 1, 1999 and as amended further by
the Current Report on Form 8-K/A (August 18, 1999) filed
with the Commission on November 17, 1999;
o Current Report on Form 8-K (September 3, 1999) filed with
the Commission on September 3, 1999;
o Current Report on Form 8-K (September 20, 1999) filed with
the Commission on September 27, 1999;
o Current Report on Form 8-K (September 23, 1999) filed with
the Commission on October 1, 1999; and
o Current Report on Form 8-K (December 15, 1999) filed with
the Commission on December 17, 1999;
o Current Report on Form 8-K (December 17, 1999) filed with
the Commission on December 17, 1999
o Current Report on Form 8-K (January 12, 2000) filed with the
Commission on January 24, 2000;
o Current Report on Form 8-K (February 9, 2000) filed with the
Commission on February 22, 2000;
o Current Report on Form 8-K (February 14, 2000) filed with
the Commission on March 3, 2000;
o Current Report on Form 8-K (March 9, 2000) filed with the
Commission on March 9, 2000;
o Current Report on Form 8-K (March 9, 2000) filed with the
Commission on March 10, 2000;
o Current Report on Form 8-K (April 28, 2000) filed with the
Commission on May 10, 2000;
o Current Report on Form 8-K (March 10, 2000) filed with the
Commission on May 25, 2000;
o Current Report on Form 8-K (August 16, 2000) filed with the
Commission on August 17, 2000;
o Current Report on Form 8-K (August 18, 2000) filed with the
Commission on August 18, 2000;
o All of our filings pursuant to the Exchange Act after the
date of filing the initial registration statement and prior
to effectiveness of the registration statement; and
o The description of our common stock contained in our
Registration Statementregistration statement on Form 8-A, filed with the
Commission on January 11, 1994 (File No. 000-23262).
You may request a copy of these filings, at no cost, by writing or
telephoning us using the following contact information:
Catherine Taylor
Director, Investor Relations
CMGI, Inc.
100 Brickstone Square
First Floor
Andover, MA 01810
(978) 684-3600
You should rely only on the information incorporated by reference,
provided in this prospectus or any supplement or that we have referred you
to. We have not authorized anyone else to provide you with different
information. You should not assume that the information in this prospectus
or any supplement is accurate as of any date other than the date on the
front of those documents. However, you should realize that the affairs of
CMGI may have changed since the date of this prospectus. This prospectus
will not reflect such changes. You should not consider this prospectus to
be an offer or solicitation relating to the securities in any jurisdiction
in which such an offer or solicitation relating to the securities is not
authorized. Furthermore, you should not consider this prospectus to be an
offer or solicitation relating to the securities if the person making the
offer or solicitation is not qualified to do so, or if it is unlawful for
you to receive such an offer or solicitation.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Expenses[to be updated with
CMGI and completed at filing]
The following table sets forth the expenses to be borne by CMGI in
connection with the offering ofofferings described in this registration statement. All
such expenses other than the shares will be
borne by the Registrant and are estimated as follows: Commission registration fee..................... $147,676fee are estimates.
Commission registration fee................................ $ 104,003
Legal fees and expenses......................... 75,000expenses.................................... $ 35,000
Accounting fees and expenses.................... 10,000expenses............................... $ 50,000
Miscellaneous expenses.......................... 10,000
--------
Total........................................ $242,676
========fees and expenses (including listing fees,
if applicable)........................................ $ 15,000
---------
Total.................................................. $ 204,003
---------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law grants the
Registrantregistrant the power to indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he is or was a director, officer,
employee or agent of the Registrant,registrant, or is or was serving at the request of
the Registrantregistrant as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgements, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Registrant,registrant, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, provided, however, no
indemnification shall be made in connection with any proceeding brought by
or in the right of the Registrantregistrant where the person involved is adjudged to
be liable to the Registrantregistrant except to the extent approved by a court.
Article NINTH of the registrant's restated certificate of incorporation and
Article VII of the Registrant's Restated By-laws providesregistrant's restated by-laws provide that the
Registrantregistrant shall, to the fullest extent permitted by applicable law,
indemnify each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding by
reason of the fact that he is or was, or has agreed to become, a director
or officer of the Registrant,registrant, or is or was serving at the written request
of the Registrant,registrant, as a director, officer, trustee, partner, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. The indemnification provided for in Article NINTH of the
registrant's restated certificate of incorporation and Article VII of the
Registrant's Restated By-lawsregistrant's restated by-laws is expressly not exclusive of any other
rights to which those seeking indemnification may be entitled under any
law, agreement or vote of stockholders or disinterested directors or
otherwise, and shall inure to the benefit of the heirs, executors and
administrators of such persons. Article VII of the Registrant's Restated
By-lawsregistrant's restated
by-laws also provides that the Registrantregistrant shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Registrant,registrant, or is or was serving at the
request of the Registrant,registrant, as a director, trustee, partner, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against any liability asserted against and incurred by
such person in any such capacity.
Pursuant to Section 102(b)(7) of the Delaware General Corporation
Law, Article EIGHTH of the Registrant's Restated Certificateregistrant's restated certificate of
Incorporationincorporation eliminates a director's personal liability for monetary
damages to the RegistrantCMGI and its stockholders for breaches of fiduciary duty as a
director, except in circumstances involving a breach of a director's duty
of loyalty to the Registrantregistrant or its stockholders, acts or omissions not in
good faith, or which involve intentional misconduct or knowing violations
of the law, self-dealing or the unlawful payment of dividends or repurchase
of stock.
The Registrantregistrant maintains an insurance policy on behalf of itself
and certain of its subsidiaries, and on behalf of the directors and
officers thereof, covering certain liabilities which may arise as a result
of the actions of such directors and officers.
The Registrantregistrant has entered into agreements with all of its
directors affirming the Registrant'sregistrant's obligation to indemnify them to the
fullest extent permitted by law and providing various other protections.
ITEM 16. EXHIBITS
Exhibit No. Description
----------- -----------
3.1 Restated Certificate of Incorporation of CMGI, Inc. Filed as
Exhibit 4.1 to CMGI Inc.'s Registration Statementregistration statement on Form
S-3 (File No. 333-85047) filed with the Commission on August
12, 1999.
3.2 Restated By-laws3.1(a) Certificate of CMGI, Inc.Designations, Preferences and Rights of
Series D Preferred Stock. Filed as Exhibit 3.24.1 to CMGI
Inc.'s Registration Statement on Form S-1 (File No.
33-71518) filed with the Commission on November 10, 1993.
4.1 Securities Purchase Agreement, dated June 29, 1999, by and
among CMGI, Inc. and the persons named on the signature
pages thereto. Filed as Exhibit 99.1 to the Current Report
on Form 8-K filed with the Commission on July 7,September 2,
1999.
4.2 Registration Rights Agreement, dated June 29, 1999, by and
among3.1(b) Amendment of Restated Certificate of Incorporation of
CMGI, Inc. and the persons named on the signature
pages thereto.(dated May 5, 2000). Filed as Exhibit 99.23.1 to the Current Report
onCMGI
Inc.'s Form 8-K10-Q filed with the Commission on July 7, 1999.
4.3 Certificate of Designations, Preferences and Rights of the
Series C Convertible Preferred StockJune 14, 2000.
3.2 Restated by-laws of CMGI, Inc. Filed as Exhibit 99.33.1 to the Current ReportCMGI,
Inc.'s registration statement on Form 8-KS-4 (File No.
333-92107) filed with the Commission on July 7,December 3, 1999.
4.4 Certificate of Correction to the Certificate of
Designations, Preferences and Rights of the Series C
Convertible Preferred Stock4.3 The form of CMGI, Inc. common stock certificate. Filed as
Exhibit 99.44.1 to the Current Report onCMGI, Inc.'s Form 8-K10-K filed with the
Commission on July 7,October 29, 1999.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the validity of the common stock being registered hereby.
Filed as Exhibit 5.1 to CMGI, Inc.'s Registration Statement
on Form S-3 (File No. 333-90587)be
filed with the Commission
on November 9, 1999.by amendment.
23.1 Consent of KPMG LLP, independent accountants to CMGI, Inc.
23.2 Consent of Pricewaterhouse CoopersKPMG LLP, independent accountants (Flycast
Communications)
23.3 Consent of KPMG LLP, independent accountants (AdForce)
23.4 Consent of PricewaterhouseCoopers LLP, independent
accountants (AltaVista, Zip2, and
Shopping.com)
independent accountants.
23.323.5 Consent of Singer Lewak Greenbaum & Goldstein LLP,
independent auditors (Shopping.com)
23.6 Consent of Deloitte & Touche LLP, independent auditors.
23.4auditors
(Flycast Communications)
23.7 Consent of Arthur Andersen LLP, independent auditors
(yesmail.com)
23.8 Consent of PricewaterhouseCoopers LLP, independent
accountants (Tallan)
23.9 Consent of Ernst & Young LLP, independent auditors (AdForce)
23.10 Consent of Ernst & Young LLP, independent auditors (uBid)
23.11 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (containedto be
filed by amendment.
24.1 Power of Attorney (included on the signature page of this
registration statement)
99.1 Audited balance sheets of AdForce, Inc. as of December 31,
1997 and 1998, and the related statements of operations,
stockholders' equity and cash flows for the period from
January 16, 1996 (inception) to December 31, 1996 and for
the years ended December 31, 1997 and 1998 as filed in Exhibit 5.1, which was partpages
F-1 through F-25 of CMGI, Inc.'sthe Registrant's Registration Statement
on Form S-3S-4 (File No. 333-90587)333-92139).
99.2 Audited balance sheets of uBid, Inc. as of December 31, 1998
and 1999, and the related statements of operations, cash
flows and changes in stockholders' equity for the period
from April 1, 1997 (Inception) to December 31, 1997 and the
years ended December 31, 1998 and 1999 as filed within pages F-1
through F-16 of the Commission on November 9, 1999).
24.1 Power of Attorney (previously filed as part of CMGI'sRegistrant's Registration Statement on
Form S-3S-4 (File No. 333-90587)
filed with the Commission on November 9, 1999)333-32158).
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrantregistrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statementregistration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement.registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement.registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the Registration
Statementregistration statement or any material change to such
information in the Registration
Statement;registration statement; provided, however, that
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Registrantregistrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned Registrantregistrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant'sregistrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the Registration Statementregistration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrantregistrant pursuant to the provisions referred
to in Item 15 hereof, or otherwise, the Registrantregistrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrantregistrant of expenses incurred
or paid by a director, officer or controlling person of the Registrantregistrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrantregistrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrantregistrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Amendment No. 1 to the Registration Statementregistration statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the Town of Andover, the
Commonwealth of Massachusetts, on the 17th22nd day of November, 1999.August 2000.
CMGI, INC.
By: /s/ Andrew J. Hajducky III
_________________________________--------------------------------------
Andrew J. Hajducky III, CPA
Chief Financial Officer and Treasurer
POWER OF ATTORNEY
We, the undersigned officers and directors of CMGI, Inc.,
hereby severally constitute and appoint David S. Wetherell and Andrew J.
Hajducky III, and each of them acting singly, our true and lawful
attorneys-in- fact, with full power granted to them in any and all
capacities (including substitutions), to execute for us and in our names in
the capacities indicated below this registration statement (including any
pre- and post-effective amendments), and any related Rule 462(b)
registration statement or amendment thereto, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, and generally to do all such things in
our name and behalf in our capacities as officers and directors to enable
CMGI, Inc. to comply with the provisions of the Securities Act and all
requirements of the Securities and Exchange Commission, hereby ratifying
and confirming all that each of said attorneys-in-fact may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, as amended, this Amendment No. 1 to the Registration Statementregistration statement has been signed by the
following persons in the capacities indicated as of November 17, 1999.
Signature Title
--------- ------
* Chairman of the Board, President and Chief
- --------------------------------- Executive Officer (Principal Executive
David S. Wetherell Officer)
* Chief Financial Officer and Treasurer
- --------------------------------- (Principal Financial Officer and
Andrew J. Hajducky III, CPA Principal Accounting Officer)
* Director
- ---------------------------------
William H. Berkman
* Director
- ---------------------------------
Craig D. Goldman
* Director
- ---------------------------------
Avram Miller
* Director
- ---------------------------------
Robert J. Ranalli
* Director
- ---------------------------------
William D. Strecker
- ---------------------------------
*By: /s/ Andrew J. Hajducky III
---------------------------
Andrew J. Hadjducky III
Attorney-in-fact
Exhibit IndexAugust 22, 2000.
Signature Title
--------- -----
/s/ David S. Wetherell Chairman of the Board, President and Chief Executive
- ------------------------------- Officer (Principal Executive Officer)
David S. Wetherell
/s/ Andrew J. Hajducky, III Chief Financial Officer and Treasurer (Principal Financial
- ------------------------------- Officer and Principal Accounting Officer)
Andrew J. Hajducky III, CPA
/s/ William H. Berkman Director
- -------------------------------
William H. Berkman
/s/ Craig D. Goldman Director
- -------------------------------
Craig D. Goldman
/s/ Avram Miller Director
- -------------------------------
Avram Miller
/s/ Robert J. Ranalli Director
- -------------------------------
Robert J. Ranalli
/s/ Harold F. Enright, Jr. Director
- -------------------------------
Harold F. Enright, Jr.
EXHIBIT INDEX
Exhibit No. Description
--------------------- -----------
3.1 Restated Certificate of Incorporation of CMGI, Inc. Filed as
Exhibit 4.1 to CMGI Inc.'s Registration Statementregistration statement on Form
S-3 (File No. 333-85047) filed with the Commission on
August 12, 1999.
3.2 Restated By-laws3.1(a) Certificate of CMGI, Inc.Designations, Preferences and Rights of
Series D Preferred Stock. Filed as Exhibit 3.24.1 to CMGI
Inc.'s Registration Statement on Form S-1 (File No.
33-71518) filed with the Commission on November 10, 1993.
4.1 Securities Purchase Agreement, dated June 29, 1999, by and
among CMGI, Inc. and the persons named on the signature
pages thereto. Filed as Exhibit 99.1 to the Current Report
on Form 8-K filed with the Commission on July 7,September
2, 1999.
4.2 Registration Rights Agreement, dated June 29, 1999, by and
among3.1(b) Amendment of Restated Certificate of Incorporation of CMGI,
Inc. and the persons named on the signature
pages thereto.(dated May 5, 2000). Filed as Exhibit 99.23.1 to the Current Report
onCMGI
Inc.'s Form 8-K10-Q filed with the Commission on July 7, 1999.
4.3 Certificate of Designations, Preferences and Rights of the
Series C Convertible Preferred StockJune 14,
2000.
3.2 Restated by-laws of CMGI, Inc. Filed as Exhibit 99.33.1 to the Current ReportCMGI,
Inc.'s registration statement on Form 8-KS-4 (File No.
333-92107) filed with the Commission on July 7,December 3,
1999.
4.4 Certificate of Correction to the Certificate of
Designations, Preferences and Rights of the Series C
Convertible Preferred Stock4.3 The form of CMGI, Inc. common stock certificate. Filed as
Exhibit 99.44.1 to the Current Report onCMGI, Inc.'s Form 8-K10-K filed with the
Commission on July 7,October 29, 1999.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the validity of the common stock being registered hereby.
Filed as Exhibit 5.1 to CMGI, Inc.'s Registration Statement
on Form S-3 (File No. 333-90587)be
filed with the Commission
on November 9, 1999.by amendment.
23.1 Consent of KPMG LLP, independent accountants to CMGI, Inc.
23.2 Consent of Pricewaterhouse CoopersKPMG LLP, independent accountants (Flycast
Communications)
23.3 Consent of KPMG LLP, independent accountants (AdForce)
23.4 Consent of PricewaterhouseCoopers LLP, independent
accountants (AltaVista, Zip2, and
Shopping.com)
independent accountants.
23.323.5 Consent of Singer Lewak Greenbaum & Goldstein LLP,
independent auditors (Shopping.com)
23.6 Consent of Deloitte & Touche LLP, independent auditors.
23.4auditors
(Flycast Communications)
23.7 Consent of Arthur Andersen LLP, independent auditors
(yesmail.com)
23.8 Consent of PricewaterhouseCoopers LLP, independent
accountants (Tallan)
23.9 Consent of Ernst & Young LLP, independent auditors (AdForce)
23.10 Consent of Ernst & Young LLP, independent auditors (uBid)
23.11 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (containedto be
filed by amendment.
24.1 Power of Attorney (included on the signature page of this
registration statement).
99.1 Audited balance sheets of AdForce, Inc. as of December 31,
1997 and 1998, and the related statements of
operations, stockholders' equity and cash flows for the
period from January 16, 1996 (inception) to December
31, 1996 and for the years ended December 31, 1997 and
1998 as filed in Exhibit 5.1, which was partpages F-1 through F-25 of CMGI, Inc.'sthe
Registrant's Registration Statement on Form S-3S-4 (File
No. 333-90587)333-92139).
99.2 Audited balance sheets of uBid, Inc. as of December 31,
1998 and 1999, and the related statements of
operations, cash flows and changes in stockholders'
equity for the period from April 1, 1997 (Inception) to
December 31, 1997 and the years ended December 31, 1998
and 1999 as filed within pages F-1 through F-16 of the
Commission on November 9, 1999).
24.1 Power of Attorney (previously filed as part of CMGI'sRegistrant's Registration Statement on Form S-3S-4 (File
No. 333-90587)
filed with the Commission on November 9, 1999)333-32158).