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As Filed with the Securities and Exchange Commission on October 27, 1997
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
CKS GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 77-0385435
(State or other jurisdiction of (I.R.S. Employer
incorporation organization) Identification Number)
10441 Bandley Drive
Cupertino, California 95014
(408) 366-5100
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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MARK D. KVAMME
Chief Executive Officer
CKS GROUP, INC.
10441 Bandley Drive
Cupertino, California 95014
(408) 366-5100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
BARRY E. TAYLOR, ESQ.
DANIEL R. MITZ, ESQ.
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
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
<TABLE>
<CAPTION>
Proposed
Maximum
Title of Proposed Maximum Aggregate
Securities to Amount to be Offering Price Per Offering Amount of
be Registered Registered Share (1) Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 341,579 $32.375 $11,058,620.13 $3,351.10
================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee, based
on the closing price of the Common Stock as reported on the Nasdaq
National Market on October 24, 1997 in accordance with Rule 457 under the
Securities Act of 1933.
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.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
State.
Subject to Completion October 27, 1997
PROSPECTUS
341,579 SHARES
CKS GROUP, INC.
--------------------
COMMON STOCK
($0.001 PAR VALUE)
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This Prospectus relates to the public offering, which is not being
underwritten, of shares of the common stock ("Common Stock") of CKS Group, Inc.,
a Delaware corporation (together with its consolidated subsidiaries, "CKS" or
the "Company") offered from time to time by the Selling Stockholders named
herein (the "Selling Stockholders") for their own benefit. It is anticipated
that the Selling Stockholders will generally offer shares of Common Stock for
sale at prevailing prices in the over-the-counter market on the date of sale.
The Company will receive no part of the proceeds of sales made hereunder. None
of the shares offered pursuant to this Prospectus have been registered prior to
the filing of the Registration Statement of which this Prospectus is a part.
The Common Stock of the Company is traded on the Nasdaq National
Market (Nasdaq Symbol: CKSG). On October 24, 1997, the closing price of the
Company's Common Stock was $32.375.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
The Selling Stockholders and any broker executing selling orders on
behalf of the Selling Stockholders may be deemed to be an "underwriter" within
the meaning of the Securities Act. Commissions received by any such broker may
be deemed to be underwriting commissions under the Securities Act.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is __________ __, 1997.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus is delivered, upon written or oral request of
any such person, a copy of any and all of the information that has been or may
be incorporated by reference in this Prospectus, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests for such copies should be directed to CKS Group, Inc.,
10441 Bandley Drive, Cupertino, CA 95014, Attn.: Investor Relations (telephone
(408) 366-5100).
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at Seven World Trade Center,
13th Floor, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Common Stock of the Company is quoted on
the Nasdaq National Market. Reports, proxy and information statements and other
information concerning the Company may be inspected at The Nasdaq Stock Market
at 1735 K Street, N.W., Washington, D.C. 20006. Information, as of particular
dates, concerning directors and officers of the Company, their remuneration,
options granted to them, and the principal holders of securities of the Company
has been disclosed in the proxy statements distributed to shareholders of the
Company and filed with the Commission. The Commission maintains a World Wide Web
site that contains reports, proxy and information statements and other
information filed with the Commission. The address of the Site is
http://www.sec.gov.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the shares of Common Stock offered hereby, reference
is hereby made to the Registration Statement. Statements contained herein
concerning the provisions of any document are not necessarily complete, and each
such statement is qualified in its entirety by reference to the copy of such
document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference in this Prospectus: (i) the Company's Annual
Report on Form 10-K for the year ended November 30, 1996, filed pursuant to
Section 13 of the Exchange Act; (ii) the Company's Current Report on Form 8-K
dated as of December 18, 1996, as amended by Registrant's report on Form 8-K/A
filed on January 17, 1997, filed pursuant to Section 13 of the Exchange Act;
(iii) the Company's Current Report on Form 8-K dated January 3, 1997 filed
pursuant to Section 13 of the Exchange Act; (iv) the Company's Current Report on
Form 8-K dated January 31, 1997 filed pursuant to Section 13 of the Exchange
Act, as amended by Registrant's reports on Form 8-K/A filed March 6, 1997 and
May 28, 1997; (v) the Company's Current Report on Form 8-K dated February 27,
1997 filed pursuant to Section 13 of the Exchange Act; (vi) the Company's
Current Report on Form 8-K dated March 10, 1997, filed pursuant to Section 13 of
the Exchange Act; (vii) the Company's Current Report on Form 8-K dated March 24,
1997, filed pursuant to Section 13 of the Exchange Act; (viii) the Company's
Current Report
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on Form 8-K dated June 25, 1997, filed pursuant to Section 13 of the Exchange
Act as amended by Registrant's Report on Form 8-K/A filed October 24, 1997; (ix)
the Company's Current Report on Form 8-K dated July 25, 1997; (x) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 2, 1997, filed
pursuant to Section 13 of the Exchange Act; (xi) the Company's Quarterly Report
on Form 10-Q for the quarter ended June 1, 1997, filed pursuant to Section 13 of
the Exchange Act; (xii) the Company's Quarterly Report Form 10-Q for the quarter
ended August 31, 1997, filed pursuant to Section 13 of the Exchange Act; and
(xiii) the description of the Company's Common Stock contained in its
Registration Statement on Form 8-A as filed with the Commission on November 30,
1995.
All reports and other documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement incorporated herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY
CKS Group, Inc. ("CKS" or the "Company") specializes in offering a
wide range of integrated marketing communication services that help companies
market their products, services and messages. The integrated marketing
communication services the Company provides include strategic corporate and
product positioning, corporate identity and product branding, new media, systems
integration, environmental design, packaging, collateral systems, advertising,
direct mail, consumer promotions, trade promotions and media placement.
Depending on the scope of the assignment, the Company's services to its clients
range from execution of a discrete marketing project, such as designing product
packaging, to taking responsibility for the overall marketing message through
various methods. When the Company assumes responsibility for the overall
marketing message, the Company works with the client to analyze the client's
products or services, and the market for those services, and to evaluate the
appropriate media to reach the desired market efficiently.
The Company is a provider of integrated marketing programs that
utilize advanced technology solutions and new media -- which the Company defines
as media that deliver content to end users in digital form, including the World
Wide Web, the Internet, proprietary online services, CD-ROMs, laptop PC
presentations and interactive kiosks.
The Company was incorporated in California in 1994 and is the
successor to three predecessor corporations, CKS Partners, Inc., CKS Pictures,
Inc. and CKS Interactive, Inc., which are now wholly owned subsidiaries of the
Company. CKS Partners, Inc. originally began business in 1987 with two employees
as Cleary Communications. CKS Pictures, Inc. and CKS Interactive, Inc. were
incorporated in 1994. The Company was reincorporated in Delaware in December
1995. The Company acquired Schell/Mullaney, Inc. ("Schell/Mullaney") in August
1996; Donovan & Green, Inc. ("Donovan & Green") in January 1997; McKinney &
Silver ("M&S") in January 1997; CKS Holding Deutschland GmbH (formerly EPG
Elektronische Publikationen GmbH) ("CKS GmbH") in March 1997; Gormley &
Partners, Inc. ("Gormley & Partners") in March 1997; and SiteSpecific, Inc.
("SiteSpecific") in June 1997. The Company's executive offices are located at
10441 Bandley Drive, Cupertino, California 95014. Its telephone number at that
address is (408) 366-5100. The Company's Internet address is:
http://www.cks.com. Information contained on the Company's Internet site shall
not be deemed a part of this Prospectus.
References made in this Prospectus to "CKS," the "Company" or the
"Registrant" refer to CKS Group, Inc. and its wholly owned subsidiaries.
CKS|Group(TM), CKS|Interactive(TM), CKS|Onsite(TM), CKS|Partners(TM) and
CKS|Pictures(TM) are the trademarks of CKS Group, Inc., which may be registered
in some jurisdictions. All other trademarks used are owned by their respective
owners.
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RISK FACTORS
In addition to reviewing other information in this Prospectus and the
Company's Annual Report on Form 10-K and the other documents incorporated herein
by reference the following factors should be considered carefully in evaluating
the Company and its business before purchasing the shares of Common Stock
offered by this Prospectus. Statements in this "Risk Factors" section regarding
expectations or future events and certain sections of the Incorporated Documents
(identified with more particularity in such Incorporated Documents) may contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Actual results could differ materially from those projected in such
forward-looking statements as a result of the factors set forth below and
elsewhere in this document and the Incorporated Documents offered hereby.
DEPENDENCE ON KEY ACCOUNTS.
The Company's five largest clients accounted for 48% and 39% of the
Company's revenues for the fiscal years ended November 30, 1995 and November 30,
1996, respectively, with fluctuations in the amount of revenue contribution from
each such client from quarter to quarter. Audi and MCI, the Company's two
largest clients during the fiscal year ended November 30, 1996, accounted for
approximately 14% and 9% of the Company's revenues, respectively, during the
period. Although the Company has recently acquired several continuing
relationships with significant clients through business acquisitions, many of
the Company's clients generally retain the Company on a project by project
basis. Accordingly, a client from whom the Company generates substantial revenue
in one period may not be a substantial source of revenue in a subsequent period.
For example, of the five largest clients (in terms of fees paid to the Company)
during the fiscal year ended November 30, 1996, only three were in the top five
for the fiscal year ended November 30, 1995. To the extent that the Company's
major clients do not remain a significant source of revenues, and the Company is
unable to replace these clients, there could be a direct and immediate material
adverse effect on the Company's business, financial condition and operating
results. The Company's typical project lasts four to six weeks. Once a project
is completed there can be no assurance that a client will engage the Company for
further services. In addition, the Company's clients may unilaterally reduce
their use of the Company's services or terminate existing projects without
penalty. The termination of the Company's business relationship with any of its
significant clients or a material reduction in the use of the Company's services
by a significant client would have a material adverse effect on the Company's
business, financial condition and operating results.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS AND MARGINS; SEASONALITY OF
BUSINESS.
The Company's operating results have fluctuated in the past and may
fluctuate in the future as a result of a variety of factors, including timing of
the completion, material reduction or cancellation of major projects or the loss
of a major client, timing of the receipt of new business, timing of the hiring
or loss of personnel, timing of the opening or closing of an office, the
relative mix of high margin creative projects as compared to lower margin
production projects, changes in the pricing strategies and business model of the
Company or its competitors, capital expenditures and other costs relating to the
expansion of operations, and other factors that are outside of the Company's
control. Operating results could also be materially adversely affected by
increased competition in the Company's markets. The Company's operating margins
may fluctuate from quarter to quarter depending on the relative mix of lower
cost full time employees versus higher cost independent contractors. The Company
experiences some seasonality in its business which results from timing of
product introductions and business cycles of the Company's clients. The
Company's revenues tend to be somewhat higher during the third and fourth
quarters of the Company's fiscal year as the Company's clients prepare marketing
campaigns for products launched in anticipation of fall trade shows and the
holiday season. The Company's revenues for the first fiscal quarter tend to be
somewhat lower because many clients have expended most of their marketing
budgets prior to the end of the calendar year and do not release funds from the
next calendar year's marketing budget until mid to late January. The Company
expects this seasonality to continue in the future. As a result of the foregoing
and other factors, the Company anticipates that it may experience material and
adverse fluctuations in future operating results on a quarterly or annual basis.
Therefore, the Company believes that period to period comparisons of its
revenues and operating results are not necessarily meaningful and that such
comparisons cannot be relied upon as indicators of future performance.
MANAGEMENT OF GROWTH; RISKS ASSOCIATED WITH EXPANSION.
The Company's business has grown rapidly in recent periods through
expansion of existing operations and through acquisition of other marketing
communication service providers. The growth of the Company's business and
expansion of its customer base have placed a significant strain on the Company's
management and operations. In the last several years, the Company has opened
offices in Portland (Oregon), New York and Washington, D.C. In addition, the
Company has acquired offices in Raleigh, North Carolina; Hamburg, Germany;
Vienna, Austria; and Greenwich, Connecticut through various business
combinations. The Company's expansion has resulted, and is expected in the
future to result, in substantial growth in the number of its employees and in
increased responsibility for both existing and new management personnel and
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strain on the Company's existing operational, financial and management
information systems. The Company's success depends to a significant extent on
the ability of its executive officers and other members of senior management to
operate effectively, both independently and as a group.
In addition, the Company plans to expand its offerings of integrated
marketing communication services and products. There can be no assurance that
the Company will be successful in identifying new services or products that will
be attractive to clients or that such services or products will ultimately
generate revenues in excess of costs to implement them. Difficulties in
recruiting and assimilating new personnel, enhancing the Company's financial and
operational controls and expanding the Company's marketing and customer support
capabilities may impede the Company's ability to pursue its growth strategy. In
general, there can be no assurance that the Company will be able to manage its
recent or any future expansions effectively, and any inability to do so would
have a material adverse effect on the Company's business, financial condition
and operating results. There also can be no assurance that the Company will be
able to sustain the rates of growth that it has experienced in the past.
DEVELOPING MARKET FOR NEW MEDIA; NEW ENTRANTS; UNPROVEN ACCEPTANCE OF THE
COMPANY'S NEW MEDIA SOLUTIONS.
The Company's future growth is dependent to a significant extent upon
its ability to increase the amount of revenue it derives from providing
marketing and advertising solutions to its customers through new media, which
the Company defines as media that delivers content to end users in digital form,
including the World Wide Web, the Internet, proprietary online services,
CD-ROMs, laptop PC presentations and interactive kiosks. The market for
marketing and advertising through new media has only recently begun to develop,
is rapidly evolving and is characterized by an increasing number of market
entrants who have introduced or developed products and services for
communication and commerce through new media. Demand and market acceptance for
recently introduced products and services are subject to a high level of
uncertainty. There can be no assurance that commerce and communication through
new media will continue to grow. Revenues from new media projects represented
approximately 25.8% of revenues for the quarter ended August 31, 1997 compared
to 24.5% for the quarter ended August 31, 1996 (after giving effect to the
restatement to include M&S and SiteSpecific). The use of new media in marketing
and advertising, particularly by those individuals and enterprises that have
historically relied upon traditional means of marketing and advertising,
generally requires the acceptance of a new way of conducting business and
exchanging information. In particular, enterprises that have already invested
substantial resources in other means of conducting commerce and exchanging
information may be particularly reluctant or slow to adopt a new strategy that
may make their existing resources and infrastructure less useful.
In connection with the Company's new media services, the Company is
exploring new methods to derive revenue, so that a larger percentage of its
revenues is recurring. These methods include long-term service contracts,
ongoing content development contracts and technology consulting and maintenance
services. There is no assurance that the Company will be able to negotiate such
arrangements with clients.
RISKS ASSOCIATED WITH ACQUISITIONS.
As part of its business strategy, the Company expects to make
acquisitions of, or significant investments in, businesses that offer
complementary marketing communication services, products and technologies. Any
such future acquisitions or investments would be accompanied by the risks
commonly encountered in acquisitions of businesses. Such risks include, among
other things, the difficulty of assimilating the operations and personnel of the
acquired businesses, the potential disruption of the Company's ongoing business,
the inability of management to maximize the financial and strategic position of
the Company through the successful incorporation of acquired personnel and
clients, the maintenance of uniform standards, controls, procedures and policies
and the impairment of relationships with employees and clients as a result of
any integration of new management personnel. In August 1996, the Company
acquired Schell/Mullaney for consideration consisting of an initial payment, in
Common Stock of the Company, of $5 million and additional future consideration
of up to $9 million in Common Stock of the Company if certain operating results
are achieved in 1997 and 1998. In January 1997, the Company acquired the assets
of Donovan & Green for consideration consisting of an initial cash payment of
$5.15 million and the right to receive $4.83 million in cash and Common Stock of
the Company over the next three fiscal years and up to an additional $6.67
million cash and Common Stock of the Company over the next four fiscal years
contingent on attainment of certain financial goals. Also in January 1997, the
Company acquired M&S for consideration consisting of 841,291 shares of Common
Stock which as of the closing of the acquisition had an approximate value of
$24.0 million. In March 1997, the Company completed the acquisition of CKS GmbH
for consideration consisting of $6.5 million in cash and Common Stock of the
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Company, and the contingent right to future payments of up to $10 million in
cash and stock if certain financial performance goals are met, and certain
additional payments if such goals are exceeded. The Company also acquired
Gormley & Partners for cash and stock in March and SiteSpecific for stock in
June 1997 and also regularly engages in discussions with other potential
acquisition candidates. The Company expects that future acquisitions, if any,
could provide for consideration to be paid in cash, stock or a combination of
cash and stock. Acquisitions accounted for as a purchase increase the amount of
goodwill recorded as an asset on the Company's financial statements and
generally increase the amount of such goodwill that must be amortized against
operating results in the future. There can be no assurance that the Company's
prior acquisitions or any other potential acquisitions will not have a material
adverse effect on the Company's business, financial condition and operating
results.
UNCERTAIN ADOPTION OF INTERNET AS A MEDIUM OF COMMERCE AND COMMUNICATIONS;
DEPENDENCE ON THE INTERNET.
The Company's ability to derive revenues from new media solutions will
depend in part upon a robust industry and the infrastructure for providing
Internet access and carrying Internet traffic. The Internet may not prove to be
a viable commercial marketplace because of inadequate development of the
necessary infrastructure, such as a reliable network backbone or timely
development of complementary products, such as high speed modems. Because global
commerce and online exchange of information on the Internet and other similar
open wide area networks are new and evolving, it is difficult to predict with
any assurance whether the Internet will prove to be and remain a viable
commercial marketplace. Moreover, critical issues concerning the commercial use
of the Internet (including security, reliability, cost, ease of use and access,
and quality of service) remain unresolved and may impact the growth of Internet
use. There can be no assurance that the Internet will become a viable commercial
marketplace. If the necessary infrastructure or complementary products are not
developed, or if the Internet does not become a viable commercial marketplace,
the Company's business, operating results and financial condition could be
materially adversely affected.
PROJECT PROFIT EXPOSURES.
The Company has historically generated the substantial majority of its
revenues through project fees on a fixed fee for service basis. The Company
assumes greater financial risk on fixed-price type contracts than on either
time-and-material or cost-reimbursable contracts. Failure to anticipate
technical problems, estimate costs accurately or control costs during
performance of a fixed-price contract may reduce the Company's profit or cause a
loss. Although the majority of the Company's projects typically last four to six
weeks and therefore each individual short-term project creates less exposure
than a long-term fixed-price contract, in the event the Company does not
accurately anticipate the progress of a number of significant revenue-generating
projects it could have a material adverse effect on the Company's business,
operating results and financial condition.
CONFLICTS OF INTEREST.
Conflicts of interest are inherent in certain segments of the
marketing communications industry, particularly in advertising. The Company has
in the past and will in the future be unable to pursue potential advertising and
other opportunities because such opportunities will require the Company to
provide services to direct competitors of existing Company clients. In addition,
the Company risks alienating or straining relationships with existing clients
each time the Company agrees to provide services to even indirect competitors of
existing Company clients. Conflicts of interest may jeopardize the stability of
revenues generated from existing clients and preclude access to business
prospects, either of which developments could have a material adverse effect on
the Company's business, financial condition and operating results.
MARKET ACCEPTANCE OF THE COMPANY'S APPROACH; SERVICE DEVELOPMENT; RAPID
TECHNOLOGICAL CHANGE.
The Company provides an integrated approach to meet the marketing
communications needs of its clients. To compete successfully against specialized
service providers, the Company believes that its products and services in each
marketing communication discipline will need to be competitive with the services
offered by the firms that specialize in each discipline. There can be no
assurance that the Company will be successful in providing competitive solutions
to clients in each of its integrated marketing communication services and
products. Failure to do so could result in the loss of existing customers or the
inability to attract and retain new customers, either of which developments
could have a material adverse effect on the Company's business, financial
condition and operating results.
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SUSCEPTIBILITY TO GENERAL ECONOMIC CONDITIONS.
The Company's revenues and results of operations will be subject to
fluctuations based upon the general economic conditions. If there were to be a
general economic downturn or a recession in the United States, then the Company
expects that business enterprises, including its clients and potential clients,
will substantially and immediately reduce their advertising and marketing
budgets. In the event of such an economic downturn, there can be no assurance
that the Company's business, operating results and financial condition would not
be materially and adversely affected.
CONTROL BY EXISTING STOCKHOLDERS; ANTI-TAKEOVER EFFECTS OF CERTIFICATE OF
INCORPORATION AND DELAWARE LAW
Executive officers, directors, holders of five percent or more of the
Company's Common Stock and companies associated with such persons will
collectively own approximately 38% of the Company's outstanding Common Stock,
including approximately 16% held by The Interpublic Group of Companies, Inc.
Accordingly, such persons will have the effective power to influence
significantly the outcome of matters submitted for the vote of stockholders,
including the election of members of the Board of Directors and the approval of
significant change in control transactions. Their combined equity interest in
the Company accordingly may have the effect of making certain transactions more
difficult in the absence of the support of management of the Company and may
have the effect of delaying, deferring or preventing a change in control of the
Company.
In addition, the Board of Directors has the authority to issue up to
5,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of such stock
without further stockholder approval. The rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any Preferred Stock that may be issued in the future. Issuance of Preferred
Stock could have the effect of delaying, deferring or preventing a change in
control of the Company. Furthermore, certain provisions of the Company's
Certificate of Incorporation and of Delaware law could have the effect of
delaying, deferring or preventing a change in control of the Company.
SHARES ELIGIBLE FOR FUTURE SALE AS A RESULT OF ACQUISITIONS
The Company has agreed to register shares or expects that freely
saleable shares of the Company's Common Stock will be available for immediate
resale as a result of the Company's acquisitions of Schell/Mullaney, Donovan &
Green, M&S, CKS GmbH, Gormley & Partners and SiteSpecific as well as a result of
any future acquisitions. Certain of the Company's acquisitions have been
structured such that in the event that earnings targets are realized, additional
shares of the Company's Common Stock will be issued. As a result of additional
issuances in connection with these and future acquisitions or the future
registration of shares of the Company's Common Stock that have been issued in
connection with completed acquisitions, the trading price of the Company's
shares could be materially adversely affected. The Company expects that the
recipients of its Common Stock in completed or future acquisitions will sell all
or a portion of their shares of the Company's Common Stock upon receipt or soon
thereafter.
VOLATILITY OF SHARE PRICE
The trading price of the Company's Common Stock has been and in the
future is expected to continue to be subject to extreme fluctuations in response
to both business-related issues, such as quarterly variations in operating
results, announcements of new services or business acquisitions by the Company
or its competitors, the gain or loss of client accounts, and stock
market-related influences, such as changes in analysts' estimates, the presence
or absence of short-selling of the Company's stock and events affecting other
companies that the market deems to be comparable to the Company. In addition,
the stock market has from time to time experienced extreme price and volume
fluctuations that have particularly affected the market price of many
technology-oriented companies and that often have been unrelated or
disproportionate to the operating performance of these companies. These broad
market fluctuations may adversely affect the market price of the Company's
Common Stock. The trading prices of many high technology and Internet-related
companies' stocks, including the Common Stock of the Company, are at or near
their historical highs and reflect price/earning ratios substantially above
historical norms. There can be no assurance that the trading price of the
Company's Common Stock will remain at or near its current level.
-7-
<PAGE> 9
SELLING STOCKHOLDERS
The shares of Common Stock to be sold by the Selling Stockholders
pursuant to this Prospectus represent shares issued to the Selling Stockholders
by the Company in connection with the acquisition of M&S and SiteSpecific (the
"Acquisitions"). The following tables set forth the aggregate number of shares
of Common Stock held by each Selling Stockholder and the aggregate number of
shares of Common Stock offered by each Selling Stockholder hereunder. No Selling
Stockholder holds more than 1% of the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER
BENEFICIALLY NUMBER OF OF SHARES BENEFICIALLY
OWNED PRIOR TO SHARES BEING OWNED
NAME OF SELLING STOCKHOLDER OFFERING OFFERED AFTER OFFERING
- ------------------------------------------- ---------------- ------------- ----------------------
<S> <C> <C> <C>
MCKINNEY & SILVER FORMER STOCKHOLDERS:
- --------------------------------------
Larry L. Bennett........................... 14,471 10,600 3,871
Stephen E. Boase........................... 2,900 2,125 775
Joan C. Brown.............................. 5,768 4,225 1,543
Patrick H. Burnham......................... 14,471 10,600 3,871
J. Stephen Davis III....................... 5,768 4,225 1,543
Robert C. Doherty (1)...................... 67,801 48,749 19,052
Janice C. Hunter........................... 17,338 12,700 4,638
L. Lloyd Jacobs............................ 66,551 19,776 46,775
David B. Johnson (1)....................... 35,671 10,600 25,071
Donald S. Maurer........................... 7,236 5,300 1,936
Emry L. McKinney........................... 5,768 4,225 1,543
Richard Myracle............................ 17,338 12,700 4,638
Mark W. Schofield.......................... 17,338 12,700 4,638
Charles C. McKinney........................ 85,322 62,499 22,823
SITESPECIFIC FORMER STOCKHOLDERS:
- ---------------------------------
Seth Goldstein............................. 55,624 27,812 27,812
Andrew Merkatz............................. 44,413 22,207 22,206
Harte-Hanks Communications................. 102,944 51,472 51,472
Irwin Merkatz.............................. 15,930 7,965 7,965
Joel Karp.................................. 7,668 3,834 3,834
Clay Shirky................................ 1,888 944 944
Jeremy Haft ..)............................ 8,393 4,197 4,196
Cynthia Dauzier............................ 1,888 944 944
Mark Filstrup ............................. 472 236 236
Edward Bridges............................. 1,888 944 944
TOTAL................................ 604,849 341,579 263,270
</TABLE>
(1) Includes registered shares not sold from prior registration
statement(s).
-8-
<PAGE> 10
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they or
their pledgees, donees, transferees or other successors in interest intend to
sell all or a portion of the shares offered hereby from time to time in the
over-the-counter market and that sales will be made at prices prevailing at the
times of such sales. Such persons may also make private sales directly or
through a broker or brokers, who may act as agent or as principal. In connection
with any sales, the Selling Stockholders and any brokers or dealers
participating in such sales may be deemed to be underwriters within the meaning
of the Securities Act. The Company will receive no part of the proceeds of sales
made hereunder.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholders and/or purchasers of the
shares offered hereby (and, if it acts as agent for the purchaser of such
shares, from such purchaser). Usual and customary brokerage fees will be paid by
the Selling Stockholders. Broker-dealers may agree with the Selling Stockholders
to sell a specified number of shares at a stipulated price per share, and, to
the extent such a broker-dealer is unable to do so acting as agent for the
Selling Stockholders, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer commitment to the Selling Stockholders.
Broker-dealers who acquire shares as principal may thereafter resell such shares
from time to time in transactions (which may involve cross and block
transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above) in the over-the-counter
market, in negotiated transactions or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above.
The Company has advised the Selling Stockholders that Regulation M
promulgated under the Exchange Act, may apply to its sales in the market, has
furnished the Selling Stockholders with a copy of this regulation and has
informed them of the need for delivery of copies of this Prospectus. The Selling
Stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act. Any commissions paid or any
discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal. The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act.
Any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
There can be no assurance that the Selling Stockholders will sell any
or all of the shares of Common Stock offered by it hereunder.
-9-
<PAGE> 11
LEGAL MATTERS
The validity of the CKS Common Stock issuable pursuant to the
Acquisitions and certain other legal matters related to the Acquisitions was
passed upon for CKS by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California.
EXPERTS
The consolidated financial statements of the Company as of November
30, 1995 and 1996, and for each of the years in the three-year period ended
November 30, 1996, have been incorporated by reference herein and in the
Registration Statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing. The financial statements of
Schell/Mullaney, Inc. as of December 31, 1994 and 1995, and for each of the
years in the three-year period ended December 31, 1995, have been incorporated
by reference herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, independent auditors, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The financial statements of Donovan & Green as of December 31, 1994
and 1995, and for each of the years in the two-year period ended December 31,
1995, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report by Robbins, Spielman, Koenigsberg &
Parker, LLP, independent auditors, incorporated by reference herein, and upon
the authority of said firm as expert in accounting and auditing. The financial
statements of McKinney & Silver, a general partnership, as of December 31, 1995
and 1996, and for each of the years in the two-year period ended December 31,
1996, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report by Ernst & Young, LLP, independent
auditors, incorporated by reference herein, and given on thier authority of such
firm as experts in accounting and auditing.
-10-
<PAGE> 12
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information......................................................... 2
Additional Information........................................................ 2
Incorporation of Certain Documents
by Reference............................................................... 2
The Company................................................................... 3
Risk Factors.................................................................. 4
Selling Stockholders.......................................................... 9
Plan of Distribution.......................................................... 10
Legal Matters................................................................. 10
Experts....................................................................... 10
</TABLE>
341,579 SHARES
CKS GROUP, INC.
COMMON STOCK
PROSPECTUS
____________, 1997
-11-
<PAGE> 13
CKS GROUP, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
NUMBER
Item 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except Securities
and Exchange Commission and Nasdaq Stock Market Listing fees are estimates.
<TABLE>
<S> <C>
Registration Statement--Securities and Exchange Commission........$ 3,351
Nasdaq Stock Market Listing Fee...................................$ 4,822
Accounting fees...................................................$ 5,000
Legal fees........................................................$ 7,500
Miscellaneous.....................................................$ 2,500
Total.............................................................$23,173
=======
</TABLE>
Item 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation limits, to the maximum
extent permitted by Delaware law, the personal liability of directors for
monetary damages for breach of their fiduciary duties as a director. The
Company's Bylaws provide that the Company shall indemnify its officers and
directors and may indemnify its employees and other agents to the fullest extent
permitted by Delaware law. The Company has entered into indemnification
agreements with its officers and directors containing provisions which are in
some respects broader than the specific indemnification provisions contained in
the Delaware General Corporation Law. The indemnification agreements require the
Company, among other things to indemnify such officers and directors against
certain liabilities that may arise by reason of their status or service as
directors or officers (subject to certain exceptions) and to advance their
expenses incurred as a result of any proceeding against them as to which they
could be indemnified.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and with respect to any criminal action, had no reasonable cause
to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Item 16 EXHIBITS.
Exhibit
Number
------
2.1 Acquisition Agreement, dated as of January 31, 1997, by and
among Registrant, the current and former partners of
McKinney & Silver, a North Carolina general partnership,
Raleigh Acquisition Inc., a Delaware corporation, Robert C.
Doherty and Donald S. Maurer, as Partner Representatives,
and Chemical Trust Company of California as Escrow Agent.*
4.1 Registration Rights Agreement among CKS, Raleigh
Acquisition, Inc. and the current and former partners of
McKinney & Silver dated January 31, 1997.*
4.2 Registration Rights Agreement between the Registrant and the
Shareholders of SiteSpecific, Inc. dated June 17, 1997.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of KPMG Peat Marwick, LLP, independent auditors
23.2 Consent of Robbins, Spielman, Koenigsberg & Parker, LLP,
independent auditors
23.3 Consent of Ernst & Young, LLP, independent auditors
23.4 Consent of Wilson Sonsini Goodrich & Rosati (Included in
Exhibit 5.1)
24.1 Power of Attorney (see Page II-3)
---------------------------
* Incorporated by reference from exhibit to Registrant's
current report on Form 8-K dated January 31, 1997 filed with
the Commission.
II-1
<PAGE> 14
Item 17 UNDERTAKINGS.
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 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.
(2) That, for the purpose of determining any liability under the
Securities Act, each 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.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act 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.
The undersigned hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) 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
as that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
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 foregoing provisions, 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 Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, certifies that it has reasonable cause 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, thereunto duly
authorized, in the City of Cupertino, State of California, on the 27th day of
October, 1997.
CKS GROUP, INC.
By: /s/ ROBERT T. CLARKSON
---------------------------------------------
Robert T. Clarkson, Executive Vice President,
and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Mark D. Kvamme, Carlton H. Baab and
Robert T. Clarkson, jointly and severally, his or her attorneys-in-fact, each
with the power of substitution, for him or her in any and all capacities, to
sign any amendment to this Registration Statement on Form S-3 (including
post-effective amendments or any abbreviated registration statement and any
amendments thereto filed pursuant to Rule 462(b) increasing the number of
securities for which registration is sought), and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his or her substitute or substitutes, may do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
October 27, 1997 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> /s/ MARK D. KVAMME <C>
----------------------------------- Chief Executive Officer (Principal Executive Officer) and
(Mark D. Kvamme) Chairman of the Board of Directors
/s/ CARLTON H. BAAB
----------------------------------- Executive Vice President and Chief Financial Officer (Principal
(Carlton H. Baab) Financial and Accounting Officer)
/s/ ALEXANDRE BALKANSKI
----------------------------------- Director
(Alexandre Balkanski)
/s/ PIERRE R. LAMOND
----------------------------------- Director
(Pierre R. Lamond)
/s/ BARRY R. LINSKY
----------------------------------- Director
(Barry R. Linsky)
/s/ MICHAEL B. SLADE
----------------------------------- Director
(Michael B. Slade)
/s/ THOMAS K. SUITER
----------------------------------- Director
(Thomas K. Suiter)
</TABLE>
II-3
<PAGE> 16
INDEX TO EXHIBITS
Exhibit
Number
------
2.1 Acquisition Agreement, dated as of January 31, 1997, by and
among Registrant, the current and former partners of
McKinney & Silver, a North Carolina general partnership,
Raleigh Acquisition Inc., a Delaware corporation, Robert C.
Doherty and Donald S. Maurer, as Partner Representatives,
and Chemical Trust Company of California as Escrow Agent.*
4.1 Registration Rights Agreement among CKS, Raleigh
Acquisition, Inc. and the current and former partners of
McKinney &Silver dated January 31, 1997.*
4.2 Registration Rights Agreement between the Registrant and the
Shareholders of SiteSpecific, Inc. dated June 17, 1997.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of KPMG Peat Marwick, LLP, independent auditors
23.2 Consent of Robbins, Spielman, Koenigsberg & Parker, LLP,
independent auditors
23.3 Consent of Ernst & Young, LLP, independent auditors
23.4 Consent of Wilson Sonsini Goodrich & Rosati (Included in
Exhibit 5.1)
24.1 Power of Attorney (see Page II-3)
----------------------------
* Incorporated by reference from exhibit to Registrant's
current report on Form 8-K dated January 31, 1997 filed with
the Commission.
<PAGE> 1
EXHIBIT 4.2
CKS GROUP, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("AGREEMENT") is made as of June 17,
1997, between CKS Group, Inc., a Delaware corporation ("PARENT" or "CKS"), and
the Company Shareholders listed on EXHIBIT A hereto, pursuant to that certain
Agreement and Plan of Reorganization among Parent, SiteSpecific, Inc., a New
York corporation (the "COMPANY"), East Coast Acquisition Corp., a New York
corporation and a wholly owned subsidiary of Parent ("SUB"), Seth Goldstein,
Andrew P. Merkatz and Harte-Hanks Communications, Inc., a Delaware corporation
and, with respect to Article VII thereto, Larry Franklin and Andrew P. Merkatz,
as Shareholder Representatives, and Chase Trust Company of California, as Escrow
Agent, dated May 15, 1997 (the "REORGANIZATION AGREEMENT").
1. DEFINITIONS. As used in this Agreement:
(a) "EFFECTIVE TIME" means the Effective Time as defined in
Article I of the Reorganization Agreement.
(b) "FORM S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which similarly permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the commission.
(c) "MATERIAL EVENT" means the happening of any event during the
period that the registration statement described in Section 2 hereof is required
to be effective as a result of which, in the reasonable judgment of Parent, such
registration statement or the related prospectus contains or may contain any
untrue statement of a material fact or omits or may omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(d) "REGISTRABLE SECURITIES" means 50% of the Merger Shares
issued to the Company Shareholders (including the Escrow Shares), which are
eligible for registration by Parent pursuant Section 5.1 of the Reorganization
Agreement.
(e) "SEC" means the Securities and Exchange Commission.
(f) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
Terms not otherwise defined herein have the meanings given to
them in the Reorganization Agreement.
2. REGISTRATION. Parent shall use commercially reasonable efforts to
cause the Registrable Securities issued to the Company Shareholders to be
registered under the Securities Act no later than 180 days after the Effective
Time, so as to permit the resale thereof, and in connection therewith shall
prepare and file with the SEC and shall use commercially reasonable efforts to
cause to become
<PAGE> 2
effective, a Form S-3 covering the Registrable Securities; provided, however,
that the Company Shareholders shall provide all such information and materials
relating to the Company Shareholders, as applicable, and take all such action as
may be required in order to permit Parent to comply with all the applicable
requirements of the SEC and to obtain any desired acceleration of the effective
date of such Form S-3, such provision of information and materials to be a
condition precedent to the obligations of Parent pursuant to this Agreement and
the Reorganization Agreement. The offerings made pursuant to such registrations
shall not be underwritten. Notwithstanding the foregoing, Parent shall not be
required to cause the Registrable Securities to be registered if Parent's legal
counsel delivers a legal opinion to the Company Shareholder seeking to sell all
of its Registrable Securities that such sale may be effected in a single
three-month period without registration under the Securities Act pursuant to
Rule 144 under the Securities Act.
3. POSTPONEMENT OF REGISTRATION.
(a) Registration. Notwithstanding Section 2 above, Parent shall
be entitled to postpone the declaration of effectiveness of any Form S-3
prepared and filed pursuant to Section 2 for a reasonable period of time, but
not in excess of 60 calendar days after the applicable deadline, if the Board of
Directors of Parent, acting in good faith, determines that there exists material
non-public information about CKS.
(b) Material Event. The Company Shareholders agree that, upon
receipt of any notice from Parent of the happening of a Material Event, the
Company Shareholders will forthwith discontinue disposition of the Registrable
Securities pursuant to any Form S-3 described in Section 2 until the Company
Shareholders' receipt of copies of supplemented or amended prospectuses prepared
by Parent (which Parent will use its commercially reasonable efforts to prepare
and file promptly), and, if so directed by Parent, the Company Shareholders will
deliver to Parent all copies in their possession, other than permanent file
copies then in the Company Shareholders' possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such notice. In no
event shall Parent delay causing to be effective a supplement or post-effective
amendment to any Form S-3 pursuant to Section 2 or the related prospectus, for
more than 90 consecutive days or 120 days during any 365 consecutive calendar
day period.
4. OBLIGATIONS OF PARENT. Except as set forth in Sections 2 and 3,
Parent shall (i) prepare and file with the SEC the Form S-3 in accordance with
Section 2 hereof with respect to the shares of Registrable Securities and shall
use commercially reasonable efforts to cause such Form S-3 to become effective
as provided in Section 2 and to keep such Form S-3 continuously effective until
the earlier to occur of (A) the sale of all of the Registrable Securities so
registered and (B) the first anniversary of the Effective Time; (ii) furnish to
the Company Shareholders such number of copies of any prospectus (including any
preliminary prospectus and any amended or supplemented prospectus), as the
Company Shareholders may reasonably request in order to effect the offering and
sale of the shares of the Registrable Securities to be offered and sold, but
only while Parent shall be required under the provisions hereof to cause such
Form S-3 to remain current; (iii) use its commercially reasonable efforts to
register or qualify the shares of the Registrable Securities covered by such
Form S-3 under the securities or blue sky laws of such jurisdictions as the
Company Shareholders shall reasonably request (provided that
-2-
<PAGE> 3
Parent shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such jurisdiction where it has not been qualified), and do any and all other
acts or things which may be reasonably necessary or advisable to enable the
Company Shareholders to consummate the public sale or other disposition of the
Registrable Securities in such jurisdictions; (iv) cause all such Registrable
Securities to be listed on each securities exchange or National Association of
Securities Dealers, Inc. Automated Quotation System on which similar securities
issued by Parent are then listed; (v) notify the Company Shareholders upon the
happening of any event as a result of which the prospectus included in such Form
S-3, as then in effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; (vi) so long as the Form S-3 remains effective, promptly prepare, file
and furnish to the Company Shareholders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; (vii) notify the Company Shareholders promptly after it shall receive
notice thereof, of the date and time any Form S-3 and each post-effective
amendment thereto has become effective or a supplement to any prospectus forming
a part of such Form S-3 has been filed; (viii) notify the Company Shareholders
promptly of any request by the SEC for the amending or supplementing of such
Form S-3 or prospectus or for additional information; and (ix) advise the
Company Shareholders promptly after it shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of any Form S-3 or the initiation or threatening of any proceeding
for that purpose and promptly use commercially reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued.
5. EXPENSES. Parent shall pay the expenses incurred by Parent in
connection with any registration of Registrable Securities pursuant to this
Agreement including all SEC, NASD and blue sky registration and filing fees,
printing expenses, transfer agents' and registrars' fees, and the reasonable
fees and disbursements of Parent's outside counsel and independent accountants.
The Company Shareholders shall be responsible for all commissions and transfer
taxes, as well as any other expenses incurred by the Company Shareholders, other
than the fees and disbursements of counsel to the Company Shareholders not
exceeding $1,000, which shall be paid by Parent.
6. INDEMNIFICATION. In the event of any offering registered pursuant to
this Agreement:
(a) Parent will indemnify each Company Shareholder with respect
to any registration effected pursuant to this Agreement, against all expenses,
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, or any amendment or supplement thereto, or prospectus related
thereto, incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading, or any violation by Parent of any rule or
regulation promulgated under the Securities Act, or state securities laws, or
common law,
-3-
<PAGE> 4
applicable to Parent in connection with any such registration, and will
reimburse such Company Shareholder, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, provided that Parent will not be
liable in any such case (i) to the extent that any such claim, loss, damage,
liability or expense arises out of or is based in any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to Parent by an instrument duly
executed by such Company Shareholder and stated to be specifically for use
therein or (ii) if a copy of the final prospectus relating to any registration
statement (as then amended or supplemented if Parent shall have furnished any
amendments or supplements thereto) (the "FINAL PROSPECTUS") was not sent or
given by or on behalf of such Company Shareholder to a purchaser of the Company
Shareholder's Registrable Securities, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Registrable Securities to such purchaser, and if the final prospectus (as so
amended or supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability.
(b) Each Company Shareholder will severally indemnify Parent,
each of its directors and officers, each person who controls Parent within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) or a material fact contained in
any registration statement, or any amendment or supplement thereto, or
prospectus related thereto, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement or prospectus in reliance upon and in
conformity with written information furnished to Parent by an instrument duly
executed by such Company Shareholder and stated to be specifically for use
therein and will reimburse Parent, the remaining Company Shareholders, such
directors, officers, or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement or prospectus, in reliance upon and in
conformity with written information furnished to Parent by an instrument duly
executed by such Company Shareholder and stated to be specifically for use
therein.
(c) Each party entitled to indemnification under this Section 6
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has notice of any claim as to which indemnity may be sought, and shall permit
the Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom, and the Indemnified Party may participate in such defense
at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is impaired as a result of such failure to give
notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
-4-
<PAGE> 5
Whether or not the defense of any claim or action is assumed by the Indemnifying
Party, such Indemnifying Party will not be subject to any liability for any
settlement without its consent.
(d) The obligations of Parent and the Company Shareholders under
this Section 6 shall survive the completion of any offering of stock in a
registration statement under this Agreement.
7. NON-ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause Parent to
register Registrable Securities pursuant to this Agreement may not be assigned
by the Company Shareholders to any person or entity; provided, however, that
upon the death of any Company Shareholder, the rights to cause Parent to
register Registrable Securities pursuant to this Agreement shall inure to such
Company Shareholder's devisee, legatee or other designee; and provided, further,
that a Company Shareholder that is a corporation may assign the rights to cause
Parent to register Registrable Securities pursuant to this Agreement to any
wholly owned subsidiary of such Company Shareholder.
8. AMENDMENT OF REGISTRATION RIGHTS. This Agreement may be amended by
the holders of a majority of the Registrable Securities and Parent at any time
by execution of an instrument in writing signed on behalf of each of the
parties.
9. TERMINATION. The registration rights set forth in this Agreement
shall terminate as to any Company Shareholder at such time as all of the
Registrable Securities then held by such Company Shareholder can be sold by such
Company Shareholder in a single 3-month period in accordance with Rule 144 under
the Securities Act.
10. GRANT OF ADDITIONAL REGISTRATION RIGHTS. The Company Shareholders
acknowledge that Parent may acquire other companies and in the course of such
acquisitions may grant the equity owners thereof registration rights with
respect to their shares of Parent on terms which would be negotiated at such
time and may be materially different than the terms of this Agreement.
11. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
delivery to the party to be notified in person or by courier service or five
days after deposit with the United States mail, postage prepaid, addressed (a)
if to the Company Shareholders, at the Company Shareholders' addresses as set
forth in the securities register of Sub or Parent as the case may be or (b) if
to Parent at 10441 Bandley Drive, Cupertino, California 95014, Attention:
Executive Vice President--Business Development.
12. GOVERNING LAW; INTERPRETATION. This Agreement shall be construed in
accordance and governed for all purposes by the laws of the State of New York
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
13. SEVERABILITY; SURVIVAL. If any portion of this Agreement is held by
a court of competent jurisdiction to conflict with any federal, state or local
law, or to be otherwise invalid or unenforceable, such portion of this Agreement
shall be of no force or effect, and this Agreement shall otherwise remain in
full force and effect and be construed as if such portion had not been included
in this Agreement.
-5-
<PAGE> 6
14. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding of the parties and supersedes all prior discussions, agreement and
understandings relating to the subject matter hereof.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
IN WITNESS WHEREOF, Parent and the Company Shareholders have caused this
Agreement to be executed as of the date first above written.
CKS GROUP, INC.
/s/ ROBERT T. CLARKSON
---------------------------------
Signature of Authorized Signatory
Executive Vice President
---------------------------------
Print Name and Title
COMPANY SHAREHOLDERS
/s/
---------------------------------
Signature of Authorized Signatory
---------------------------------
Print Name of Shareholder
-6-
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
<PAGE> 7
EXHIBIT A
Shareholders of SiteSpecific, Inc.
Seth Goldstein
Andrew Merkatz
Harte-Hanks Communications, Inc.
Irwin Merkatz
Joel Karp
Clay Shirky
Jeremy Haft
Mark Filstrup
Edward Bridges
Cynthia Dauzier
-7-
<PAGE> 1
EXHIBIT 5.1
October 27, 1997
CKS Group, Inc.
10441 Bandley Drive
Cupertino, California 95014
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on or about October 27, 1997
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 341,579 shares of your Common
Stock (the "Shares"), to be offered for sale by the Selling Stockholders named
therein. As legal counsel for CKS Group, we have examined the proceedings taken
in connection with the sale of the Shares by the Selling Stockholders in the
manner set forth in the Registration Statement in the Section entitled "Plan of
Distribution." It is our opinion that the Shares are legally and validly issued,
fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, including the prospectus constituting a part thereof,
and further consent to the use of our name wherever it appears in the
Registration Statement and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
<PAGE> 1
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT ACCOUNTANTS
The Board of Directors
CKS Group, Inc.:
We consent to the incorporation herein by reference of our report
dated June 17, 1997, relating to the consolidated balance sheets of CKS Group,
Inc. and subsidiaries as of November 30, 1995 and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended November 30, 1996, which report
appears in the Form 8-K/A of CKS Group, Inc. dated June 25, 1997. We also
consent to the incorporation herein by reference of our report dated June 6,
1996, relating to the balance sheets of Schell/Mullaney, Inc. as of December 31,
1994 and 1995, and the related statements of operations and retained earnings,
and cash flows for each of the years in the three-year period ended December 31,
1995, which report appears in the Form 8-K/A of CKS Group, Inc. dated August 1,
1996. We also consent to the references to our firm under the heading "Experts"
in the Prospectus.
/s/ KPMG PEAT MARWICK LLP
----------------------------------
San Jose, California
October 24, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF
ROBBINS, SPIELMAN, KOENIGSBERG &
PARKER LLP, INDEPENDENT AUDITORS
The Board of Directors of
CKS Group, Inc.:
We consent to the incorporation by reference herein of our report dated
November 4, 1996, except as to Note 9 which is as of December 30, 1996, with
respect to the balance sheets of Donovan & Green, Inc. as of December 31, 1994
and 1995, and the related statements of operations and retained earnings and
cash flows for the years then ended, which report appears in the report on Form
8-K of CKS Group, Inc., dated January 3, 1997. We also consent to the reference
to our firm under the heading "Experts" in the Prospectus.
/s/ ROBBINS, SPIELMAN, KOENIGSBERG & PARKER LLP
-----------------------------------------------
New York, New York
October 23, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors of
CKS Group, Inc.:
We consent to the reference to our firm under the caption "Experts" and
to the use of our report dated January 31, 1997, with respect to the financial
statements of McKinney & Silver incorporated herein by reference from the report
on Form 8-K/A of CKS Group, Inc., dated January 31, 1997, as amended March 5,
1997.
/s/ ERNST & YOUNG LLP
------------------------------
Raleigh, North Carolina
October 22, 1997
