AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 8, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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)
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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
(978) 684-3600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times on and after the date on which this Registration Statement
becomes effective as the selling stockholders may determine.
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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
Proposed
Maximum
Proposed Maximum Aggregate
Title Of Shares Amount To Be Offering Price Offering Amount Of
To Be Registered Registered(1) Per Unit(2) Price(1)(2) Registration Fee
Common Stock, $0.01 par 4,971,497(1) $103.50 $514,549,940 $143,045
value per share
(1) The shares of common stock being registered will be received by the
holders of the Series C Convertible Preferred Stock, if and when such
Series C Convertible Preferred Stock is converted. The number of shares of
common stock included in the table is based on the applicable conversion
price for the 375,000 shares of Series C Convertible Preferred Stock which
shares are separated into three separate tranches of 125,000 shares each:
tranche 1 shares have a conversion price prior to maturity of $91.43 per
share; tranche 2 shares have a conversion price prior to maturity of $75.15
per share; and tranche 3 shares have a conversion price prior to maturity
of $75.32 per share. The Series C Convertible Preferred Stock is entitled
to receive semiannual dividend payments equal to 2.0% per annum, in
arrears, in cash or, at CMGI's option, through an adjustment to the
liquidation preference per share of the then outstanding shares of Series C
Convertible Preferred Stock. Assuming that all of the shares of Series C
Convertible Preferred Stock are converted into common stock immediately
prior to the maturity date at the applicable tranche conversion price and
that CMGI elects to pay each semiannual dividend payment through an
adjustment to the liquidation preference per share of the Series C
Convertible Preferred Stock, the 375,000 shares of Series C Convertible
Preferred Stock would be convertible into 4,971,497 shares of common stock.
In addition to the shares of common stock set forth in the table, in
accordance with Rule 416 this Registration Statement covers such additional
indeterminate 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) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and
based on the average of the high and low prices for a share of common stock
reported on the Nasdaq National Market ($103.50) on November 3, 1999.
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 STOCKHOLDERS 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 8 , 1999
Prospectus
CMGI, INC.
4,971,497 SHARES
COMMON STOCK
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Selling stockholders who are identified in this prospectus may offer
and sell from time to time up to 4,971,497 shares of common stock of CMGI,
Inc. by using this prospectus.
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The offering price for the common stock 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.
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CMGI's common stock is traded on the Nasdaq National Market under the
ticker symbol "CMGI". On November 8, 1999, the last reported sales price of
the common stock was $104-1/4 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 1.
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The Securities and Exchange Commission and state securities regulators
have not approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
, 1999
TABLE OF CONTENTS
Page
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RISK FACTORS.....................................................1
CMGI, INC........................................................7
USE OF PROCEEDS..................................................8
THE SELLING STOCKHOLDERS.........................................8
PLAN OF DISTRIBUTION............................................10
LEGAL MATTERS...................................................12
EXPERTS.........................................................12
WHERE YOU CAN FIND MORE INFORMATION ABOUT US....................13
RISK FACTORS
If you purchase shares of our common stock, you will take on
financial risk. In deciding whether to invest, you should carefully
consider the following factors, the information contained in this
prospectus and the other information that we have referred you to.
It is especially important to keep these risk factors in mind when
you read forward-looking statements. These are statements that relate to
future periods and include statements about our:
. expected operating results;
. market opportunities;
. acquisition opportunities;
. ability to compete; and
. stock price.
Generally, the words "anticipates," "believes," "expects," "intends"
and similar expressions identify such forward-looking statements.
Forward-looking statements involve risks and uncertainties, 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 as of the date of this
prospectus. We do not have any obligation to inform you if forward-looking
statements, or the circumstances they are based on, change.
As used herein, "CMGI," "we" or "us" refers to CMGI, Inc. and its
consolidated subsidiaries.
CMGI MAY NOT HAVE OPERATING INCOME OR NET INCOME IN THE FUTURE.
During the fiscal year ended July 31, 1999, CMGI had an operating
loss of approximately $127 million and net income of approximately $475
million. CMGI may not have operating income or net income in the future. If
CMGI continues to have operating losses, CMGI may not have enough money to
expand its business in the future.
CMGI MAY HAVE PROBLEMS RAISING MONEY IT NEEDS IN THE FUTURE.
In recent years, CMGI has financed its operating losses with profits
from selling some of the stock of companies in which it had invested. This
funding source may not be sufficient in the future, and CMGI may need to
obtain funding from outside sources. However, CMGI may not be able to
obtain funding from outside sources. In addition, even if CMGI finds
outside funding sources, CMGI may be required to issue to such outside
sources securities with greater rights than that currently possessed by
holders of shares of common stock. CMGI 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.
CMGI MAY INCUR SIGNIFICANT COSTS TO AVOID INVESTMENT COMPANY STATUS AND MAY
SUFFER ADVERSE CONSEQUENCES IF DEEMED TO BE AN INVESTMENT COMPANY.
CMGI 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 equity investments
in other businesses made by CMGI and its venture subsidiaries may
constitute investment securities under the 1940 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 1940 Act unless a particular exclusion or Commission safe harbor
applies. If CMGI were to be deemed an investment company, it would become
subject to the requirements of the 1940 Act. As a consequence, CMGI would
be prohibited from engaging in business or issuing its securities as it has
in the past and might be subject to civil and criminal penalties for
noncompliance. In addition, certain of CMGI's contracts might be voidable,
and a court-appointed receiver could take control of CMGI and liquidate its
business.
Although CMGI's investment securities currently comprise less than
40% of its assets, fluctuations in the value of these securities or of
CMGI's other assets may cause this limit to be exceeded. This would require
CMGI to attempt to reduce its investment securities as a percentage of its
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 sells investment securities, it may
sell them sooner than it otherwise would. These sales may be at depressed
prices and CMGI may never realize anticipated benefits from, or may incur
losses on, these investments. Some investments may not be sold due to
contractual or legal restrictions or the inability to locate a suitable
buyer. Moreover, CMGI may incur tax liabilities when it sells assets. CMGI
may also be unable to purchase additional investment securities that may be
important to its operating strategy. If CMGI decides to acquire
non-investment security assets, it may not be able to identify and acquire
suitable assets and businesses.
CMGI DEPENDS ON CERTAIN IMPORTANT EMPLOYEES, AND THE LOSS OF ANY OF THOSE
EMPLOYEES MAY HARM CMGI'S BUSINESS.
CMGI's performance is substantially dependent on the performance of
its executive officers and other key employees, in particular, David S.
Wetherell, its chairman, president, and chief executive officer, Andrew J.
Hajducky III, its chief financial officer and treasurer, and David
Andonian, its president of corporate development. The familiarity of these
individuals with the Internet industry makes them especially critical to
CMGI's success. In addition, CMGI's success is dependent on its ability to
attract, train, retain, and motivate high quality personnel, especially for
its management team. The loss of the services of any of CMGI's executive
officers or key employees may harm its business. CMGI's success also
depends on its continuing ability to attract, train, retain, and motivate
other highly qualified technical and managerial personnel. Competition for
such personnel is intense.
IN 1999, CMGI'S REVENUE DEPENDED IN LARGE PART ON A SINGLE CUSTOMER AND
LOSS OF THAT CUSTOMER COULD SIGNIFICANTLY DAMAGE CMGI'S 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's total revenues
and 47% of CMGI's revenues from its fulfillment services business. CMGI
believes that it will continue to derive a significant portion of its
operating revenues from sales to a small number of customers. CMGI
currently does not have any agreements with Cisco which obligate Cisco to
buy a minimum amount of products from CMGI or to designate CMGI as their
sole supplier of any particular products or services.
CMGI'S STRATEGY OF EXPANDING ITS BUSINESS THROUGH ACQUISITIONS OF OTHER
BUSINESSES AND TECHNOLOGIES PRESENTS SPECIAL RISKS.
CMGI intends to continue to expand through the acquisition of
businesses, technologies, products, and services from other businesses.
Acquisitions involve a number of special problems, including:
. difficulty integrating acquired technologies, operations, and personnel
with the existing business;
. diversion of management attention in
connection with both negotiating the acquisitions and integrating the
assets;
. strain on managerial and operational resources as management
tries to oversee larger operations;
. exposure to unforeseen liabilities of
acquired companies;
. potential issuance of securities in connection with
the acquisition which securities lessen the rights of holders of CMGI's
currently outstanding securities;
. the need to incur additional debt; and
. the requirement to record additional future operating costs for the
amortization of goodwill and other intangible assets, which amounts could
be significant.
CMGI may not be able to successfully address these problems.
Moreover, CMGI's future operating results will depend to a significant
degree on its ability to successfully manage growth and integrate
acquisitions. In addition, many of CMGI's investments are in early-stage
companies with limited operating histories and limited or no revenues. CMGI
may not be able to successfully develop these young companies.
GROWING CONCERNS ABOUT THE USE OF "COOKIES" MAY LIMIT OUR 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. Our technology currently uses cookies to
collect information about an Internet user's movement through the Internet.
Most 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 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 of 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 growth 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:
. rapidly changing technology;
. evolving industry standards;
. frequent new product and service introductions;
. shifting distribution channels; and
. 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'S GROWTH PLACES STRAINS ON ITS MANAGERIAL, OPERATIONAL AND FINANCIAL
RESOURCES.
CMGI's rapid growth has placed, and is expected to continue to place,
a significant strain on its managerial, operational and financial
resources. Further, as the number of CMGI's users, advertisers and other
business partners grows, CMGI will be required to manage multiple
relationships with various customers, strategic partners and other third
parties. Further growth of CMGI or an increase in the number of its
strategic relationships will increase this strain on CMGI's managerial,
operational and financial resources, inhibiting CMGI's ability to achieve
the rapid execution necessary to successfully implement its 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.
CMGI MUST DEVELOP AND MAINTAIN POSITIVE BRAND NAME AWARENESS.
CMGI believes that establishing and maintaining its brand names is
essential to expanding its Internet business and attracting new customers.
CMGI also believes 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's brand names will depend largely on CMGI's ability to provide
consistently high-quality products and services. If CMGI is unable to
provide high-quality products and services, the value of its brand name may
suffer.
CMGI'S QUARTERLY RESULTS MAY FLUCTUATE WIDELY.
CMGI's operating results have fluctuated widely on a quarterly basis
during the last several years, and CMGI expects to experience significant
fluctuation in future quarterly operating results. Many factors, some of
which are beyond CMGI's control, have contributed to these quarterly
fluctuations in the past and may continue to do so. Such factors include:
. demand for CMGI's products and services;
. payment of costs associated with CMGI's acquisitions, sales of assets and
investments;
. timing of sales of assets;
. market acceptance of new
products and services;
. specific economic conditions in the Internet and
direct marketing industries; and
. general economic conditions.
The emerging nature of the commercial uses of the Internet makes
predictions concerning CMGI's future revenues difficult. CMGI believes that
period-to-period comparisons of its results of operations will not
necessarily be meaningful and should not be relied upon as indicative of
CMGI's future performance. It is also possible that in some fiscal quarters
CMGI's operating results will be below the expectations of securities
analysts and investors. In such circumstances, the price of CMGI's common
stock may decline.
THE PRICE OF CMGI'S COMMON STOCK HAS BEEN VOLATILE.
The market price of CMGI's 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's common stock.
CMGI FACES SECURITY RISKS.
The secure transmission 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 CMGI or other
Internet sites 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. Security breaches of the activities
of CMGI, its customers and sponsors involving the storage and transmission
of proprietary information, such as credit card numbers, may expose CMGI to
a risk of loss or litigation and possible liability. CMGI cannot assure
that its security measures 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:
. delay or prevent a change in control of CMGI;
. impede a merger, consolidation, takeover, or other transaction involving
CMGI; or
. 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'S GLOBAL OPERATIONS IS SUBJECT TO SPECIAL RISKS AND
COSTS.
CMGI has begun, and intends to continue, to expand its operations
outside of the United States. This international expansion will require
significant management attention and financial resources. CMGI's ability to
expand offerings of its products and services internationally will be
limited by the general acceptance of the Internet and intranets in other
countries. In addition, CMGI has limited experience in such international
activities. Accordingly, CMGI expects to commit substantial time and
development resources to customizing its products and services for selected
international markets and to developing international sales and support
channels.
CMGI expects that its export sales 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's products
and services more expensive and, therefore, potentially less competitive in
international markets. As CMGI increases its international sales, its 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.
CMGI COULD BE SUBJECT TO INFRINGEMENT CLAIMS.
From time to time, CMGI has been, and expects to continue to be,
subject to third party claims in the ordinary course of business, including
claims of alleged infringement of intellectual property rights by CMGI. Any
such claims may damage CMGI's business by:
. subjecting CMGI to significant liability for damages;
. invalidating CMGI's proprietary rights;
. being time-consuming and expensive to defend even if such claims are not
meritorious; and
. resulting in the diversion of management time and
attention.
CMGI MAY HAVE LIABILITY FOR INFORMATION RETRIEVED FROM THE INTERNET.
Because materials may be downloaded from the Internet and
subsequently distributed to others, CMGI 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.
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. 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 Internet 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,
providing 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 audio content and provide an
interactive entertainment environment; Magnitude Network provides radio
stations with integration of radio and the Internet; MyWay.com provides a
Web portal that can be personalized to an individual user's locality,
interests, and preferences, 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:
. CMG@Ventures I, LLC;
. CMG@Ventures II, LLC; and
. CMG@Ventures III, LLC.
CMGI owns 100% of the capital and is entitled to 77.5% 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 support the growth in CMGI's subsidiaries and
investments. CMGI expects to continue to develop and refine the products
and services 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.
Our principal executive office is located at 100 Brickstone Square,
Andover, Massachusetts 01810 and our telephone number is (978) 684-3600.
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
The selling stockholders are investors in the Series C Convertible
Preferred Stock. The shares of common stock offered hereby are issuable to
the selling stockholders upon conversion 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.
The following table sets forth as of November 1, 1999, the name of
each selling stockholder, the number of shares of our common stock
beneficially owned by each selling stockholder and the number of shares of
common stock which may be sold from time to time by such selling
stockholder pursuant to this prospectus. Except as described below, each
selling stockholder has sole voting and investment power with respect to
the shares of common stock set forth in the table. 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 1, 1999, there were
approximately 118,314,183 shares of our common stock outstanding.
NUMBER OF SHARES NUMBER OF SHARES
OF COMMON STOCK OF COMMON STOCK
OWNED PRIOR TO TO BE
SELLING STOCKHOLDERS THIS OFFERING REGISTERED HEREBY(1)
-------------------- ------------- --------------------
Wingate Capital Ltd.(2) 762,051 720,164
Fisher Capital Ltd.(2) 1,191,913 1,126,394
Westgate International, L.P.(3) 521,581 549,252
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, 2,022,468 662,867
LDC(4)
Halifax Fund, L.P.(5) 125,914 132,532
(1) The shares of common stock to be registered hereby are calculated
assuming that 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 convertible 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. Because the selling stockholders may offer
all or some portion of the above referenced securities pursuant to this
prospectus or otherwise, no estimate can be given as to the amount or
percentage of such securities that will be held by the selling stockholders
upon completion of any such sale. In addition, the selling stockholders
identified above may have sold, transferred or otherwise disposed of all or
a portion of such securities since November 1, 1999 in transactions exempt
from the registration requirements of the Securities Act. The selling
stockholders may sell all, part or none of the securities listed above.
Generally, only selling stockholders identified in the foregoing table
who beneficially own the 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. This prospectus relates
to the offer and sale of the shares of common stock to be received by such
selling stockholders when 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 directed 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 time in
one or more transactions (which may involve block transactions) on the
Nasdaq National Market or on such other market on which our common stock
may from time to time be trading, may sell 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. The selling stockholders shall 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
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, alternatively, may sell all or any part of
the shares 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 revisions 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 Exchange
Act, any person engaged in a distribution of the shares of common stock
covered by this prospectus may be limited in its 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 Exchange
Act and the rules and regulations promulgated thereunder, 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.
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, 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. 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 supplementing this
prospectus, are required in order to comply with federal or state
securities laws.
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, special counsel for CMGI in this transaction.
EXPERTS
The 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
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 AltaVista Company for each of the years
in the three-year period ended December 31, 1998, the financial statements
of Zip2 for each of the years in the three-year period ended December 31,
1998, and the financial statements of Shopping.com for each of the years in
the two-year period ended January 31, 1999, have been incorporated by
reference herein in reliance upon the reports of PricewaterhouseCoopers
LLP, independent accountants, given 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.
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 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 Statement filed by us with
the Commission. It does not contain all the information included or
incorporated by reference in the Registration Statement. The full
Registration Statement can be obtained from the Commission as indicated
above or from us.
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:
. Annual Report on Form 10-K for the year ended July 31, 1999,
filed with the Commission on October 29, 1999;
. Current Report on Form 8-K (June 29, 1999) filed with the
Commission on August 12, 1999;
. Current Report on Form 8-K (August 18, 1999) filed with the
Commission on September 2, 1999, as amended by the Current Report
on Form 8-K/A (August 18, 1999) filed with the Commission on
November 1, 1999;
. Current Report on Form 8-K (September 3, 1999) filed with the
Commission on September 3, 1999;
. Proxy Statement on Schedule 14A filed with the Commission on
September 23, 1999;
. Current Report on Form 8-K (September 20, 1999) filed with the
Commission on September 27, 1999;
. Current Report on Form 8-K (September 23, 1999) filed with the
Commission on October 1, 1999; and
. The description of our common stock contained in our Registration
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 in connection with the offering of the shares will be borne
by the Registrant and are estimated as follows:
Commission registration fee.............. $147,676
Legal fees and expenses.................. 75,000
Accounting fees and expenses............. 10,000
Miscellaneous expenses................... 10,000
-------
Total................................. $242,676
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law grants the
Registrant 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, or is or was serving at the request of
the Registrant 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, 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 Registrant where the person involved is adjudged to
be liable to the Registrant except to the extent approved by a court.
Article VII of the Registrant's Restated By-laws provides that the
Registrant 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, or is or was serving at the written request
of the 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 VII of the
Registrant'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-laws also provides that the Registrant 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, or is or was serving at the
request of the 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 Certificate of
Incorporation eliminates a director's personal liability for monetary
damages to the Registrant 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 Registrant or its stockholders, acts or
omissions not in good faith, intentional misconduct, knowing violations of
the law, self-dealing or the unlawful payment of dividends or repurchase of
stock.
The Registrant maintains an insurance policy on behalf of itself and
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 Registrant has entered into agreements with all of its directors
affirming the Registrant'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 Statement on Form S-3
(File No. 333-85047) filed with the Commission on August 12,
1999.
3.2 Restated By-laws of CMGI, Inc. Filed as Exhibit 3.2 to CMGI,
Inc.'s Registration Statement on Form S-1 (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, 1999.
4.2 Registration Rights Agreement, dated June 29, 1999, by and
among CMGI, Inc. and the persons named on the signature pages
thereto. Filed as Exhibit 99.2 to the Current Report on Form
8-K filed with the Commission on July 7, 1999.
4.3 Certificate of Designations, Preferences and Rights of the
Series C Convertible Preferred Stock of CMGI, Inc. Filed as
Exhibit 99.3 to the Current Report on Form 8-K filed with the
Commission on July 7, 1999.
4.4 Certificate of Correction to the Certificate of Designations,
Preferences and Rights of the Series C Convertible Preferred
Stock of CMGI, Inc. Filed as Exhibit 99.4 to the Current
Report on Form 8-K filed with the Commission on July 7, 1999.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the
validity of the common stock being registered hereby.
23.1 Consent of KPMG LLP, independent accountants to CMGI, Inc.
23.2 Consent of Pricewaterhouse Coopers LLP (AltaVista, Zip2 and
Shopping.com) independent accountants.
23.3 Consent of Singer Lewak Greenbaum & Goldstein LLP
(Shopping.com) independent auditors.
23.4 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (contained
in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this 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 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. 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.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement
or any material change to such information in the 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 Registrant 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 Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the Registrant'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 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 Registrant pursuant to the provisions referred
to in Item 15 hereof, or otherwise, the Registrant 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 Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant 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 Registrant 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
Registrant 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 Registration Statement to be signed on its behalf by the undersigned,
hereunto duly authorized, in the Town of Andover, the Commonwealth of
Massachusetts, on the 8th day of November, 1999.
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 Registration Statement has been signed by the following
persons in the capacities indicated as of November 8, 1999.
Signature Title
/s/ David S. Wetherell Chairman of the Board, President and
- --------------------------------- Chief Executive Officer (Principal
David S. Wetherell Executive Officer)
/s/ Andrew J. Hajducky III Chief Financial Officer and Treasurer
- --------------------------------- (Principal Financial Officer and
Andrew J. Hajducky III, CPA Principal Accounting Officer)
/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/ William D. Strecker Director
- ----------------------------------
William D. Strecker
Exhibit Index
Exhibit No. Description
- ---------- -----------
3.1 Restated Certificate of Incorporation of CMGI, Inc. Filed as
Exhibit 4.1 to CMGI Inc.'s Registration Statement on Form S-3
(File No. 333-85047) filed with the Commission on August 12,
1999.
3.2 Restated By-laws of CMGI, Inc. Filed as Exhibit 3.2 to CMGI,
Inc.'s Registration Statement on Form S-1 (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 Commission on July 7, 1999.
4.2 Registration Rights Agreement, dated June 29, 1999, by and
among CMGI, Inc. and the persons named on the signature pages
thereto. Filed as Exhibit 99.2 to the Current Report on Form
8-K filed with the Commission on July 7, 1999.
4.3 Certificate of Designations, Preferences and Rights of the
Series C Convertible Preferred Stock of CMGI, Inc. Filed as
Exhibit 99.3 to the Current Report on Form 8-K filed with the
Commission on July 7, 1999.
4.4 Certificate of Correction to the Certificate of Designations,
Preferences and Rights of the Series C Convertible Preferred
Stock of CMGI, Inc. Filed as Exhibit 99.4 to the Current
Report on Form 8-K filed with the Commission on July 7, 1999,
and incorporated herein by reference.
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the
validity of the common stock being registered hereby.
23.1 Consent of KPMG LLP, independent accountants to CMGI, Inc.
23.2 Consent of Pricewaterhouse Coopers LLP (AltaVista, Zip2 and
Shopping.com) independent accountants.
23.3 Consent of Singer Lewak Greenbaum & Goldstein LLP
(Shopping.com) independent auditors.
23.4 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (contained
in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
EXHIBIT 5.1
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK NEW YORK 10022
TEL: (212) 735-3000
FAX: (212) 735-2000
November 8, 1999
CMGI, Inc.
100 Brickstone Square
Andover, Massachusetts 01810
Re: CMGI, Inc. Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to CMGI, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-3 (the "Registration Statement") relating
to the registration for resale of up to 4,971,497 shares of its common
stock, par value $0.01 per share (the "Common Stock"), to be received by
the holders (the "Investors") of 375,000 shares of the Company's Series C
Convertible Preferred Stock (the "Preferred Stock") when the Preferred
Stock is converted in accordance with the terms of the Certificate of
Designations, Preferences and Rights of the Preferred Stock.
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act
of 1933, as amended (the "Act").
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Registration Statement as filed with the Securities and Exchange Commission
on the date hereof under the Act, (ii) the Restated Certificate of
Incorporation of the Company as certified by the Secretary of State of the
State of Delaware, (iii) the Restated By-laws of the Company as currently
in effect, (iv) the Certificate of Designations, Preferences and Rights of
the Preferred Stock and the Certificate of Correction thereto, as certified
by the Secretary of State of the State of Delaware on June 29, 1999 and
June 30, 1999, respectively (collectively, the "Certificates"), (v) certain
resolutions and minutes of the Board of Directors of the Company relating
to the issuance of the Common Stock and related matters and (vi) a specimen
certificate evidencing the Common Stock.
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates, statements and receipts of public officials,
certificates of officers or other representatives of the Company and
others, and such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinion set forth
herein.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of
all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such latter
documents. In making our examination of executed documents, we have assumed
that the parties thereto, other than the Company, had the power, corporate
or other, to enter into and perform all obligations thereunder and have
also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and
that such documents constitute the valid and binding obligations of such
parties. As to any facts material to the opinion expressed herein which
were not independently established or verified, we have relied upon
statements and representations of directors, officers and other
representatives of the Company and of others. In rendering the opinion set
forth below, we have assumed that the certificates representing the shares
of Common Stock issued upon conversion of the Preferred Stock will conform
to the specimen certificate examined by us and will be countersigned by a
duly authorized officer of the transfer agent for the Common Stock and duly
registered by the registrar for the Common Stock in the share record books
of the Company.
Members of our Firm are admitted to the Bar in the State of New
York, and we do not express any opinion as to the laws of any other
jurisdiction other than the Delaware General Corporation Law.
Based upon and subject to the foregoing and the limitations,
assumptions, qualifications and exceptions set forth herein, we are of the
opinion that the shares of Common Stock initially issuable upon conversion
of the Preferred Stock, if and when the shares of Preferred Stock are
converted into shares of Common Stock in accordance with their terms and
the terms of the Certificates, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to
the reference to our firm under the caption "Legal Matters" in the
Registration Statement. In giving this consent, we do not thereby admit
that we are included in the category of persons whose consent is required
under Section 7 of the Act or the rules and regulations of the Commission.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
CMGI, Inc.:
We consent to the incorporation by reference in the registration statement
of CMGI, Inc. on Form S-3 with which this consent is being filed, of our
report dated September 24, 1999, except for Note 20, which is as of October
29, 1999, with respect to the consolidated balance sheets of CMGI, Inc. as
of July 31, 1999 and 1998, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for each of the
years in the three-year period ended July 31, 1999, which report appears in
the July 31, 1999 Annual Report on Form 10-K of CMGI, Inc., and to the
reference to our firm under the heading "Experts" in the prospectus, which
is part of the Registration Statement.
/s/ KPMG LLP
KPMG LLP
Boston, Massachusetts
November 8, 1999
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reports dated as follows:
. June 29, 1999 relating to the financial statements of
AltaVista,
. April 2, 1999 relating to the financial statements of Zip2
Corporation, and
. June 9, 1999, except as to Note 12, which is as of July 3,
1999, relating to the financial statements of Shopping.com
which appear in the CMGI, Inc. Current Report on Form 8-K dated June 29,
1999. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Jose, California
November 8, 1999
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement of CMGI, Inc. on Form S- 3 of our report, dated June 17, 1997,
except for Note 6, for which the date is June 9, 1999, relating to the
financial statements of Shopping.com which appears in Form 8-K of CMGI,
Inc. dated August 12, 1999. We also consent to the reference to our Firm
under the caption "Experts" in the prospectus, which is part of this
Registration Statement.
/s/ SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
November 8, 1999
