<PAGE> 1
As Filed with the Securities and Exchange Commission on April 18, 1997
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CKS GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 7389 77-0385435
- ------------------------------- ---------------------------- ----------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation organization) Classification Code Number) 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)
---------------------------
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)
---------------------------
Copy to:
BARRY E. TAYLOR, ESQ.
DANIEL R. MITZ, ESQ.
RAMSEY HANNA, ESQ.
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
---------------------------
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>
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Title of Proposed Maximum Proposed Maximum
Securities to Amount to be Offering Price Per Aggregate 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 41,259 $25.25 $1,041,789.75 $316.00
=================================================================================================================================
</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 April 14, 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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<PAGE> 2
SUBJECT TO COMPLETION
PROSPECTUS
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41,259 SHARES
CKS GROUP, INC.
--------------------
COMMON STOCK
($0.001 PAR VALUE)
--------------------
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 Donovan & Green, Inc., a New York
corporation (the "Selling Stockholder") for its own benefit. It is anticipated
that the Selling Stockholder 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. The
Common Stock to which this Prospectus relates was received by the Selling
Stockholder pursuant to the acquisition (the "Acquisition") of all of the assets
of the Selling Stockholder, by DG Acquisition, Inc., a Delaware corporation and
wholly owned subsidiary of the Company ("Acquisition Sub"). The Common Stock
issued to the Selling Stockholder in the Acquisition was issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), provided by Section 4(2) thereof. All expenses
of registration incurred in connection with this offering are being borne by the
Company, but all selling and other expenses incurred by Selling Stockholder will
be borne by such Selling Stockholder. 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 April 14, 1997, the closing price of the Company's
Common Stock was $25.25.
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 Stockholder and any broker executing selling orders on behalf
of the Selling Stockholder 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.
-------------------------------------------
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.
-------------------------------------------
The date of this Prospectus is April __, 1997.
<PAGE> 3
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 STOCKHOLDER. 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.
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.
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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 quarterly report on Form 10-Q for the
quarter ended March 2, 1997 filed pursuant to Section 13 of the Exchange Act;
(iii) 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; (iv) the Company's current report on
Form 8-K dated January 3, 1997 filed pursuant to Section 13 of the Exchange Act;
(v) 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 report on
Form 8-K/A filed on March 5, 1997; (vi) the Company's Current Report on Form 8-K
dated February 27, 1997 filed pursuant to Section 13 of the Exchange Act; (vii)
the Company's Current Report on Form 8-K dated March 10, 1997, filed pursuant to
Section 13 of the Exchange Act; (viii) the Company's Annual Report on Form 8-K
dated March 24, 1997, filed pursuant to Section 13 of the Exchange Act; (ix) the
Company's Proxy Statement for the 1997 Annual Meeting of Stockholders, filed
pursuant to Section 14 of the Exchange Act; and (x) 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 CKS Group 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 in January 1997; McKinney & Silver ("M&S") in January 1997, EPG
Elektronische Publikationen GmbH ("EPG") in March 1997 and Gormley & Partners,
Inc. ("Gormley & Partners") in March 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 the Company's Annual Report on Form 10-K for the
fiscal year ended November 30, 1996, the other documents incorporated herein by
reference and the other information in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the securities
offered hereby.
DEPENDENCE ON KEY ACCOUNTS.
The Company's five largest clients accounted for 48% and 40% 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
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
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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% of revenues
for the quarter ended March 2, 1997 compared to 20% of the first quarter of
1996. 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 others, 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 EPG for $6.5
million in cash and Common Stock of the 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 payment if such goals are
exceeded. The Company also acquired Gormley & Partners for cash and stock in
March 1997 and is also negotiating with other potential acquisition targets. 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 the
operating statement 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
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<PAGE> 7
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.
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 66% of the Company's outstanding Common Stock,
including approximately 17.5% 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.
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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,
EPG 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 both
to business-related issues, such as quarterly variations in operating results,
announcements of new services or business acquisitions by the Company or its
competitors, and 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.
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<PAGE> 9
SELLING STOCKHOLDER
The Selling Stockholder received the shares offered by this prospectus
pursuant to the Acquisition in partial consideration for the purchase of all of
its assets by Acquisition Sub. All of the shares of Common Stock held by the
Selling Stockholder may be sold pursuant to this Prospectus. The Selling
Stockholder holds no shares of Common Stock of the Company other than those
offered pursuant to this Prospectus, which constitute less than 1% of the
outstanding Common Stock of the Company.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholder that it or its
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 Stockholder 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 Stockholder 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
Stockholder. Broker-dealers may agree with the Selling Stockholder 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
Stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the Selling Stockholder. 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 Stockholder that Regulation M
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), may apply to its sales in the market, has furnished the Selling
Stockholder with a copy of this regulation and has informed it of the need for
delivery of copies of this Prospectus. The Selling Stockholder 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 Stockholder 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 Stockholder will sell any or all
of the shares of Common Stock offered by it hereunder.
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 (other
than liabilities arising from willful misconduct of a culpable nature), to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified, and to obtain directors' and officers'
insurance, if available on reasonable terms. The
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<PAGE> 10
Company believes that these agreements are necessary to attract and retain
qualified persons as directors and officers.
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.
LEGAL MATTERS
The validity of the CKS Common Stock issuable pursuant to the Acquisition
and certain other legal matters related to the Acquisition will be passed upon
for CKS by Wilson Sonsini Goodrich & Rosati, Professional Corporation ("WSGR"),
Palo Alto, California. An investment partnership of WSGR owns 5,400 shares of
Common Stock of the Company.
EXPERTS
The supplemental consolidated financial statements, consolidated financial
statements and schedule 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 upon the
authority of said firm as experts in accounting and auditing.
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<PAGE> 11
<TABLE>
========================================= ====================================================
<S> <C>
TABLE OF CONTENTS 41,259 SHARES
Page CKS GROUP, INC.
----
Available Information............... 2
Incorporation of Certain Documents
by Reference..................... 3 --------------
The Company......................... 3
Risk Factors........................ 4
Selling Stockholders................ 8
Plan of Distribution................ 8
Indemnification..................... 9 COMMON STOCK
Legal Matters....................... 9
Experts............................. 9
PROSPECTUS
APRIL __, 1997
========================================= ====================================================
</TABLE>
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<PAGE> 12
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.
Registration Statement--Securities and Exchange Commission $ 316
Nasdaq Stock Market Listing Fee............................$ 2,000
Accounting fees............................................$ 7,500
Legal fees.................................................$ 7,500
Miscellaneous..............................................$ 2,000
Total......................................................$19,316
Item 15 Indemnification of Directors and Officers.
See "Indemnification of Directors and Officers."
Item 16 Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
4.1 Asset Purchase Agreement dated October 4, 1996 by and
among Registrant, Donovan & Green, Acquisition Sub,
Nancye L. Green and Michael Donovan.*
4.2 Amendment No. 1 to Asset Purchase Agreement dated
December 30, 1996 by and among Registrant, Donovan &
Green, Acquisition Sub, Nancye L. Green and Michael
Donovan.*
4.3 Declaration of Registration Rights by the Company dated
December 16, 1996.
5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati,
Professional Corporation.
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 (contained on page II-3 hereof).
</TABLE>
- ----------
* Filed as exhibits to Registrant's current report on Form 8-K, dated
January 3, 1997.
II-1
<PAGE> 13
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> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, CKS Group, Inc., a corporation organized and existing under the laws
of the State of Delaware, 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
18th day of April, 1997.
CKS GROUP, INC.
By: /s/ CARLTON H. BAAB
-------------------------------------------
Carlton H. Baab, Executive Vice President,
and Chief Financial Officer
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, 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 behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MARK D. KVAMME Chief Executive Officer (Principal Executive Officer) April 18, 1997
- ----------------------------------- and Chairman of the Board of Directors
(Mark D. Kvamme)
/s/ CARLTON H. BAAB Executive Vice President and Chief Financial Officer April 18, 1997
- ----------------------------------- (Principal Financial and Accounting Officer)
(Carlton H. Baab)
/s/ ALEXANDRE BALKANSKI Director April 18, 1997
- -----------------------------------
(Alexandre Balkanski)
/s/ PIERRE R. LAMOND Director April 18, 1997
- -----------------------------------
(Pierre R. Lamond)
/s/ BARRY LINSKY Director April 18, 1997
- -----------------------------------
(Barry R. Linsky)
/s/ MICHAEL B. SLADE Director April 18, 1997
- -----------------------------------
(Michael B. Slade)
/s/ THOMAS K. SUITER Director April 18, 1997
- -----------------------------------
(Thomas K. Suiter)
</TABLE>
II-3
<PAGE> 15
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------------
EXHIBITS
------------------------------------------------------
Registration Statement on Form S-3
CKS GROUP, INC.
April 18, 1997
II-4
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
4.1 Asset Purchase Agreement dated October 4, 1996 by and among
Registrant, Donovan & Green, Acquisition Sub, Nancye L. Green
and Michael Donovan.*
4.2 Amendment No. 1 to Asset Purchase Agreement dated December 30,
1996 by and among Registrant, Donovan & Green, Acquisition Sub,
Nancye L. Green and Michael Donovan.*
4.3 Declaration of Registration Rights by the Company dated December
16, 1996.
5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, Professional
Corporation.
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 (contained on Page II-3).
</TABLE>
- ----------
* Filed as exhibits to Registrant's current report on Form 8-K, dated January 3,
1997.
II-5
<PAGE> 1
EXHIBIT 4.3
CKS GROUP, INC.
DECLARATION OF REGISTRATION RIGHTS
This Declaration of Registration Rights ("Declaration") is made as of
December 31, 1996, by CKS Group, Inc., a Delaware corporation ("CKS"), for the
benefit of Donovan & Green, Inc., a New York corporation (the "Company"),
acquiring shares of the Common Stock of CKS pursuant to that Asset Purchase
Agreement dated as of October 4, 1996, (the "Agreement") among CKS, the Company,
DG Acquisition Inc., a Delaware corporation ("Sub") and wholly-owned subsidiary
of CKS, Michael Donovan and Nancye Green.
1. Definitions. As used in this Declaration:
(a) "1934 Act" means the Securities Exchange Act of 1934,
as amended.
(b) "Act" means the Securities Act of 1933, as amended.
(c) "Closing Date" means the Closing Date as defined in
Article II of the Agreement.
(d) "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 judgment of CKS, 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.
(e) "Registrable Securities" means shares of CKS Common Stock
issued to the Company as part of the Acquisition Consideration Amount pursuant
to the Agreement.
(f) "Registration Statement" means such form under the Act as
in effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits registration of the Registrable Securities
under the Act.
(g) "SEC" means the Securities and Exchange Commission.
(h) "Shareholder" shall mean each of Michael Donovan and
Nancye Green. Terms not otherwise defined herein have the meanings given to them
in the Agreement.
2. Registration. CKS shall use its commercially reasonable best efforts
to cause the Registrable Securities held by the Company to be registered under
the Act on their respective dates of issue to the Company so as to permit the
immediate resale thereof, and in connection therewith shall
-1-
<PAGE> 2
prepare and file with the SEC and shall use its commercially reasonable best
efforts to cause to become effective at such times, a Registration Statement in
such form as is then available under the Act covering the Registrable
Securities; provided, however, that the Company shall provide all such
information and materials relating to the Company and take all such action as
may be reasonably required in order to permit CKS to comply with all the
applicable requirements of the SEC and to obtain any desired acceleration of the
effective date of such Registration Statement, such provision of such
information and materials to be a condition precedent to the obligations of CKS
pursuant to this Declaration. The offerings made pursuant to such registration
shall not be underwritten.
3. Postponement of Registration.
(a) Registration. Notwithstanding Section 2 above, CKS shall
be entitled to postpone the declaration of effectiveness of the Registration
Statement prepared and filed pursuant to Section 2 for a reasonable period of
time, but not in excess of ninety (90) calendar days after the applicable
deadline, if the Board of Directors of CKS, acting in good faith, determines
that there exists material non-public information about CKS.
(b) Material Event. The Company agrees that, upon receipt of
any notice from CKS of the happening of a Material Event, the Company will
forthwith discontinue disposition of the Registrable Securities pursuant to the
Registration Statement described in Section 2 until the Company's receipt of
copies of supplemented or amended prospectuses prepared by CKS, and, if so
directed by CKS, the Company will deliver to CKS (at the expense of CKS) all
copies in its possession, other than permanent file copies then in the Company's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In no event shall CKS delay causing to be
effective a supplement or post-effective amendment to a Registration Statement
pursuant to Section 2 or the related prospectus, for more than sixty (60)
consecutive days or one hundred twenty days (120) days during any 365
consecutive calendar day period.
4. Obligations of CKS. CKS shall (i) prepare and file with the SEC the
Registration Statement in accordance with Section (2) hereof with respect to the
shares of Registrable Securities and shall use commercially reasonable efforts
to cause such Registration Statement to become effective as provided in Section
2 and to keep such Registration Statement effective until the earlier of the
sale of all of the Registrable Securities so registered or the second
anniversary of the issuance of such shares by CKS to the Company; (ii) promptly
prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary and to comply with the provisions of the Act with respect to the sale
or other disposition of all securities proposed to be registered in such
Registration Statement until the earlier of the sale of all of the shares of
Registrable Securities so registered or the second anniversary of the issuance
of such shares by CKS to the Company; (iii) furnish to the Company without
charge such number of copies of such Registration Statements, each amendment and
supplement thereto, and any prospectus (including any preliminary prospectus and
any amended or supplemented prospectus) in conformity with the requirements of
the Act, and such other documents, as the Company 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 CKS shall be required under
the provisions hereof to cause the Registration Statement to remain current;
(iv) use its
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<PAGE> 3
commercially reasonable efforts to register or qualify the shares of the
Registrable Securities covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as the Company shall
reasonably request (provided that CKS 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), keep such registration or qualification in effect for as long
as such Registration Statement remains in effect, and do any and all other acts
or things which may be necessary or advisable to enable the Company to
consummate the public sale or other disposition of the Registrable Securities in
such jurisdictions; (v) cause all such Registrable Securities to be listed on
each securities exchange or National Automated Quotation System on which similar
securities issued by CKS are then listed, and enter into such customary
agreements as may be required in furtherance thereof, including, without
limitation, listing applications and indemnification agreements in customary
form; (vi) notify the Company upon the happening of any event as a result of
which the prospectus included in such Registration Statement, 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; (vii) so long as
the Registration Statement remains effective, promptly prepare, file and furnish
to the Company 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; (viii) notify the Company,
promptly after it shall receive notice thereof, of the date and time the
Registration Statement and each post-effective amendment thereto has become
effective or a supplement to any prospectus forming a part of such Registration
Statement has been filed; (ix) notify the Company promptly of any request by the
SEC for the amending or supplementing of such Registration Statement or
prospectus or for additional information; (x) make such representations and
warranties (subject to appropriate disclosure schedule exceptions) to the
Company, in form, substance and scope as are customarily made by issuers to
selling stockholders in public offerings; and (xi) advise the Company, promptly
after it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the SEC suspending the effectiveness of the Registration
Statement or the issuance by any state of securities commission or other
regulatory authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Securities under state securities or
"blue sky" laws, or the initiation or threatening of any proceeding for that
purpose and promptly use its commercially reasonable best efforts to prevent the
issuance of any stop order or other order or to obtain its withdrawal if such
stop order or other order should be issued. In connection with any offering of
shares of Registrable Securities registered pursuant to this Declaration, CKS
shall (x) furnish the Company, at CKS's expense, with unlegended certificates
representing ownership of the shares of Registrable Securities being sold in
such denominations as the Company shall request and (y) instruct the transfer
agent and registrar of the Registrable Securities to release any stop transfer
orders with respect to the shares of Registrable Securities being sold.
5. Expenses. CKS shall pay the expenses incurred by CKS in connection
with any registration of Registrable Securities pursuant to this Declaration
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 CKS's outside counsel and independent accountants. The Company
shall be
-3-
<PAGE> 4
responsible for all underwriting discounts, commissions and transfer taxes, as
well as any other expenses incurred by the Company, including the fees and
disbursements of counsel to the Company.
6. Indemnification. In the event of any offering registered pursuant to
this Declaration:
(a) CKS will indemnify and hold harmless, to the extent
permitted by law, the Company, each of its officers, directors, employees and
agents and each person controlling the Company within the meaning of Section 15
of the Act, with respect to which registration, qualification or compliance has
been effected pursuant to this Declaration, 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,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, 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 CKS of any rule or regulation promulgated under the Act, or state
securities laws, or common law, applicable to CKS in connection with any such
registration, qualification or compliance, and will reimburse the Company, each
of its officers, directors and each person controlling the Company, each such
underwriter and each person who controls any such underwriter, 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 CKS will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to CKS by an
instrument duly executed by the Company or underwriter and stated to be
specifically for use therein.
(b) The Company will indemnify CKS, each of its directors and
officers, each person who controls CKS within the meaning of Section 15 of the
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof) solely arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, 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, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to CKS by an instrument duly executed by the Company and
stated to be specifically for use therein and will reimburse CKS, the Company,
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, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to CKS by an instrument duly executed by the Company and stated to be
specifically for use therein.
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<PAGE> 5
(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 written notice of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to participate in and assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), 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 actually 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 an unconditional release from all liability in respect to
such claim or litigation or which involves other than the payment of money and
such money is actually paid by the Indemnifying Party. 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, which consent will not be unreasonably withheld.
(d) The obligations of CKS and the Company under this Section
6 shall survive the completion of any offering of stock in a registration
statement under this Declaration.
7. Non-Assignment of Registration Rights. The rights to cause CKS to
register Registrable Securities pursuant to this Declaration may not be assigned
by the Company to any person or entity other than a Shareholder.
8. Amendment of Registration Rights. This Agreement may be amended by
the Company and CKS 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 Declaration
shall terminate at such time as all of the Registrable Securities then held by
the Company can be sold by the Company in a single 3-month period in accordance
with Rule 144 under the Act; provided that CKS during such period has complied
with any current public information requirements necessary for the sale of the
Registrable Securities.
10. 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, at the Company's address as set forth in the securities
register of CKS or (b) if to CKS at 10441 Bandley Drive, Cupertino, California
95014.
11. Governing Law; Interpretation. This Declaration of Registration
Rights 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.
-5-
<PAGE> 6
12. Severability; Survival. If any portion of this Declaration of
Registration Rights 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 Declaration of Registration Rights shall be
of no force or effect, and this Declaration of Registration Rights shall
otherwise remain in full force and effect and be construed as if such portion
had not been included in this Declaration of Registration Rights.
13. Entire Agreement. This Declaration of Registration Rights contains
the entire agreement and understanding of the parties and supersedes all prior
discussions, agreement and understandings relating to the subject matter hereof.
-6-
<PAGE> 1
EXHIBIT 5.1
April 18, 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 April 18,
1997 (the "Registration Statement") in connection with the registration under
the Securities Act of 1933, as amended, of a total of 41,259 newly issued shares
of your Common Stock (the "Shares"), to be offered for sale for the benefit of
certain selling stockholders. The Shares are to be sold from time to time in the
over-the counter-market at prevailing prices or as otherwise described in the
Registration Statement. As legal counsel for CKS Group, we have examined the
proceedings taken by you in connection with the sale of the Shares.
It is our opinion that upon conclusion of the proceedings being
taken or contemplated by us, as your counsel, to be taken prior to the issuance
of the Shares, and upon completion of the proceedings being taken in order to
permit such transactions to be carried out in accordance with the securities
laws of the various states or foreign jurisdictions where required, the Shares,
when issued and sold in the manner described in the Registration Statement, will
be legally and validly issued, fully paid and non-assessable.
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
II-6
<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 by reference herein of our report dated December
16, 1996, on our audit of the consolidated financial statements and schedule of
CKS Group, Inc. and subsidiaries as of November 30, 1995 and 1996 and for each
of the years in the three-year period ended November 30, 1996, which report
appears in the November 30, 1996 annual report on Form 10-K of CKS Group, Inc.
We also consent to the incorporation by reference herein of our report dated
June 6, 1996, on our audit of 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, which report appears in the Form 8-K/A of CKS
Group, Inc. dated August 1, 1996. We also consent to the incorporation by
reference herein of our report dated February 28, 1997, on our audit of the
supplemental consolidated financial statements of CKS Group, Inc. and
subsidiaries as of November 30, 1995 and 1996 and 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 January 31, 1997. We also consent to the
references to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG PEAT MARWICK LLP
San Jose, California
April 17, 1997
II-7
<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
April 15, 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
April 17, 1997
