As filed with the Securities and Exchange Commission on September 11, 1997
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______________
INDIVIDUAL, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE. . . . . . . . . . . . . 7375 04-3036959
(State or other Jurisdiction. . . (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
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8 NEW ENGLAND EXECUTIVE PARK WEST
BURLINGTON, MASSACHUSETTS 01803
(617) 273-6000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MICHAEL E. KOLOWICH
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN
INDIVIDUAL, INC.
8 NEW ENGLAND EXECUTIVE PARK WEST
BURLINGTON, MASSACHUSETTS 01803
(617) 273-6000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
WILLIAM B. ASHER, JR.
TESTA, HURWITZ & THIBEAULT, LLP
HIGH STREET TOWER, 125 HIGH STREET
BOSTON, MASSACHUSETTS 02110
(617) 248-7000
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this registration statement becomes effective.
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.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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.
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CALCULATION OF REGISTRATION FEE
Title of Shares to be . . . . . Amount to be Proposed Maximum Proposed Maximum Amount of
Registered. . . . . . . . . . . Registered Offering Price Per Share Aggregate Offering Price (1) Registration Fee
Common Stock, $.01
par value per share . . . . . . 1,639,530 $ 3.19(1) $ 5,230,101 $ 1,585
50,000 $ 5.25(2) $ 262,500 $ 80
------------ -------------------------- ----------------------------- -----------------
TOTAL . . . . . . . . . . . . . 1,689,530 $ 5,492,601 $ 1,665
- ------------------------------- ------------ ----------------------------- -----------------
<FN>
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) based on the average of
the high and low prices of the Common Stock as reported on the Nasdaq National Market on September 8, 1997.
(2) Such shares are issuable upon the exercise of an outstanding warrant with a fixed exercise price. Pursuant to Rule
457(h), the aggregate offering price has been computed upon the basis of the price at which the warrant may be exercised.
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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.
PROSPECTUS
DATED: SEPTEMBER 11, 1997
1,689,530 SHARES
INDIVIDUAL, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
This prospectus relates to the resale of up to 1,639,530 shares of Common
Stock, par value $.01 per share (the "Common Stock"), of Individual, Inc.
("Individual" or the "Company") from time to time by any of the selling
stockholders of the Company named herein (collectively, the "Selling
Stockholders"), as well as the issuance by the Company of 50,000 shares of
Common Stock upon the exercise of a certain outstanding warrant. See "Selling
Stockholders" and "Plan of Distribution." The Company will not receive any of
the proceeds from the resale of the 1,689,530 shares of Common Stock offered
hereby (the "Shares"). The Company has agreed to bear all of the expenses in
connection with the registration and resale of the Shares (other than selling
commissions and the fees and expenses of counsel or other advisors to the
Selling Stockholders).
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "INDV". On September 8, 1997, the last reported sale price
for the Common Stock on the Nasdaq National Market was $3.50 per share.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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.
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 an 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 registration or qualification under the securities laws of
any such State.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 11, 1997
9
AVAILABLE INFORMATION
The Company is subject to the informational 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"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at Seven World Trade Center, New York, New York 10048, and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies may also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. In addition, the Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of such site is http://www.sec.gov. The Common Stock of the Company
is quoted on The Nasdaq National Market. Reports, proxy statements and other
information concerning the Company may be inspected at the offices of the
National Association of Securities Dealers, Inc. located at 1735 K Street,
N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form S-3
(including all amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Common Stock offered hereby. This Prospectus does not contain all 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 regarding the Company and the Shares offered hereby, reference is
hereby made to the Registration Statement and to the exhibits and schedules
filed therewith. Statements contained in this Prospectus regarding the
contents of any agreement or other document filed as an exhibit to the
Registration Statement are not necessarily complete, and in each instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement for a more complete description of the matters
involved, each such statement being qualified in all respects by such
reference. The Registration Statement, including the exhibits and schedules
thereto, may be inspected at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and copies of all
or any part thereof may be obtained from such office upon payment of the
prescribed fees, and through its World Wide Web site (http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act (File No. 22734) are incorporated in this Prospectus by
reference, except as superseded or modified herein:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
2. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1997.
3. The Company's Current Report on Form 8-K dated as of July 3, 1997.
4. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997.
5. The description of the Company's Common Stock, $.01 par value per
share, contained in the Registration Statement on Form 8-A filed under the
Exchange Act and declared effective on March 14, 1996, including any amendment
or report filed for the purpose of updating such description.
All 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 the offering of the Shares hereby shall be deemed to be
incorporated by reference in this Prospectus and made a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference in this
Prospectus 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 or in any Prospectus Supplement modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus is
delivered, on the written or oral request of any such person, a copy of any or
all of the documents incorporated by reference herein (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 Robert
L. Lentz, Senior Vice President, Finance and Administration and Chief
Financial Officer, at the principal executive offices of the Company: 8 New
England Executive Park West, Burlington, Massachusetts 01803, telephone:
(617) 273-6000. Unless the context otherwise requires, references in this
Prospectus to the "Company" or "Individual" refer to Individual, Inc. and its
subsidiaries.
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus or
incorporated herein by reference. Certain statements set forth in this
Prospectus may constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject
to risks and uncertainties, and the Company's actual future results may differ
materially from those stated in any such forward-looking statements. Factors
that may cause such differences include, but are not limited to, those
described in "Risk Factors" and in the other risk factors described from time
to time in the Company's filings with the Securities and Exchange Commission.
THE COMPANY
Individual develops and markets a suite of customized news and
information services that provide knowledge workers with daily personalized
current awareness reports, while offering information providers and
advertisers new ways to reach targeted audiences. The Company delivers its
information services to more than 2,000,000 users across a range of delivery
platforms, including facsimile, electronic mail, groupware, intranets, and the
Internet. The Company's objective is to be the industry's leading provider of
current awareness business news through a strategy that links a growing user
base of knowledge workers to relevant information providers and advertisers.
The Company's extensive suite of services is tailored to address the news
and information needs of multiple market segments ranging from individuals to
enterprises. The Company's services are customized to the unique interests of
each customer. Once a customer's profile is established, the Company, through
its proprietary filtering software, editorial expertise, and industry-segment
knowledge bases, provides those items of highest relevance to the specific
interests of the customer, while eliminating redundant and irrelevant items.
The Company's principal enterprise services include First! and Hoover, which
provide news and business intelligence targeted to corporate workgroup and
enterprise subscribers. The Company's primary single-user service is
NewsPage, a Web-based personalized business news service that offers
customized, relevant business news and information each day, organized in a
topic-based menu system. The Company also offers HeadsUp, a personalized
daily business intelligence report for business professionals, and publishes
ClariNews, a global electronic newspaper on the Internet which is distributed
through internet service providers and to corporations, educational
institutions, and individual subscribers.
In June 1997, the Company acquired ClariNet Communications Corp.
("ClariNet"), the publisher of ClariNews, a Web-based electronic newspaper.
In June 1997, the Company also acquired CompanyLink, a Web-based service of
Delphi Internet Services which detects corporate-specific references and
market statistics on more than 65,000 companies and dynamically links those
references to related news and information on the Web. As a result of the
acquisitions of ClariNet and CompanyLink, the Company has enhanced its
NewsPage service by adding breaking news updates by business topic along with
company and market research.
The Company was incorporated in Delaware in 1989. The Company's
principal executive offices are located at 8 New England Executive Park West,
Burlington, Massachusetts 01803, and its telephone number is (617) 273-6000.
RISK FACTORS
In addition to the other information in this Prospectus, the following
risk factors should be considered carefully in evaluating the Company and its
business before purchasing the Shares offered hereby. Certain statements set
forth in this Prospectus may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to risks and uncertainties, and the Company's actual
future results may differ materially from those stated in any such
forward-looking statements. Factors that may cause such differences include,
but are not limited to, those described in the following Risk Factors and in
the other risk factors described from time to time in the Company's filings
with the Securities and Exchange Commission.
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
In view of the Company's revenue growth in recent years and its limited
operating history, period-to-period comparisons of its financial results are
not necessarily meaningful and should not be relied upon as any indication of
future performance. The Company's quarterly results of operations have
fluctuated significantly in the past and will likely fluctuate in the future
due to, among other factors, demand for its services and changes in service
mix, the size and timing of new and renewal subscriptions from corporate
customers, advertising revenue levels, the effects of new service
announcements by the Company and its competitors, the ability of the Company
to develop, market and introduce new and enhanced versions of its services on
a timely basis and the level of product and price competition. A substantial
portion of the Company's cost of revenue, which consists principally of fees
payable to information providers, telecommunications costs and personnel
expenses, is relatively fixed in nature. The Company's operating expense
levels are based, in significant part, on the Company's expectations of future
revenue. If quarterly revenues are below management's expectations, both gross
margins and results of operations would be adversely affected because a
relatively small amount of the Company's costs and expenses varies with its
revenue in the short-term. The Company has incurred operating losses since
inception and expects to continue to incur operating losses on both a
quarterly and annual basis for the foreseeable future. There can be no
assurance that the Company will sustain revenue growth or achieve
profitability.
EMERGING MARKET FOR CUSTOMIZED INFORMATION SERVICES
The market for the Company's services has only recently begun to develop,
is rapidly evolving and is characterized by increasing competition from a
variety of companies, ranging from traditional news and media companies to
Internet-based information services and including companies that may have
significantly more resources. The market for current awareness products is
experiencing rapid changes as organizations introduce company-wide information
and knowledge solutions built on enterprise computing platforms such as
internal intranets and groupware products, such as Lotus Notes. As a result
of these changes, Individual has migrated its First! product from fax and
e-mail distribution, sold primarily to small groups of users at an
average annual contract value of less than $10,000, to distribution via
intranet and Lotus Notes systems capable of servicing large organizations.
This evolving market focus has required the Company not only to invest in the
product development and engineering required to introduce new and enhanced
enterprise-based products such as First! Intranet and First! Notes, but
also to adapt its selling efforts in order to address the requirements of
large organizations that desire to implement current business awareness
solutions on an enterprise-wide basis over their existing information
infrastructures. Such solutions typically involve large contracts with
annual contract values in excess of $50,000 and generally require a
longer sales cycle than departmental or business-group sales. As a result,
the Company has been investing in additional sales and sales
management personnel with experience in selling large contracts, as well as in
additional customer service personnel capable of addressing increasingly
complex customer needs. Approximately 75% of the Company's enterprise customer
base presently distributes the Company's products from intranets and Lotus
Notes, almost double from a year ago. Notwithstanding such growth, however,
the ability of the Company to achieve future growth is heavily dependent on
the Company's ability to successfully sell large contracts to enterprise
customers and to support implementations with those customers. There can be
no assurance that the Company will be successful in recruiting and training
additional sales and customer service personnel with the skills required to
sell and support large contracts which may affect its rate of growth. In
addition, the Company is experiencing longer sales cycles and if this trend
continues its rate of growth and future operating results may be adversely
affected.
The Company's financial results will also depend to a significant extent
upon advertising revenues generated by NewsPage, its Web-based single-user
service. Such revenues will depend, among other matters, on the acceptance of
the Internet as a viable advertising medium, as well as on the Company's
ability to generate a high level of pageviews through increased NewsPage
readership and user activity, to build a direct sales force to sell
advertising, to attract and retain information providers, and to develop a
user base of a sufficient size and with appropriate demographics to attract
advertisers. The Company relies in part on distribution alliances to increase
readership of NewsPage and, in the fourth quarter of 1996, introduced the
NewsPage Network, which is intended to enable the Company to supply daily news
content to Web services sponsored by third parties, thereby extending the
reach of its advertisers and expanding NewsPage readership, at a low cost of
subscriber acquisition. Because the NewsPage Network has only recently been
introduced, however, there can be no assurance that it will be successful in
acquiring additional new users of NewsPage. If the Company is unable to
attract and increase paid advertising sponsorship of NewsPage, the Company's
business and results of operations will be materially and adversely affected.
DEPENDENCE ON KEY PERSONNEL
The Company depends, in significant part, upon the continued services
of its key technical, editorial, sales and product development, most of whom
are not bound by employment agreements, and only certain of whom are
bound by noncompetition agreements. The Company's plan requires the
hiring of additional engineering and sales personnel in order to add
additional products and features and grow its customer base. In the
Boston, Massachusetts and Silicon Valley, California markets, these skills
are in high demand and there is no assurance that the Company will be
successful in hiring these personnel.
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DEPENDENCE ON INFORMATION PROVIDERS
The Company's services currently offer approximately 600 news and
information sources from more than 60 information providers. Termination of
one or more significant information provider agreements would decrease the
news and information which the Company offers its customers and could have a
material adverse effect on the Company's business and results of operations.
Also, an increase in the fees required to be paid by the Company to its
information providers would have an adverse effect on the Company's gross
margins and results of operations. Because the Company licenses the
informational content included in its services from third parties, its
exposure to copyright infringement actions may increase. Although the Company
generally obtains representations as to the origins and ownership of such
licensed content and generally obtains indemnification for any breach thereof,
there can be no assurance that such representations will be accurate or that
indemnification will adequately compensate the Company for any breach.
RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS
Management may from time to time consider acquisitions of assets or
businesses that it believes may enable the Company to obtain complementary
skills and capabilities, offer new products and services, expand its customer
base or obtain other competitive advantages. Such acquisitions, including the
Company's acquisition of Hoover in November 1996 and its acquisitions of
CompanyLink and ClariNet in June 1997, involve potential risks, including
difficulties in assimilating the acquired company's operations, technology,
products and personnel, completing and integrating acquired in-process
technology, diverting management's resources, uncertainties associated with
operating in new markets and working with new employees and customers, and the
potential loss of the acquired company's key employees.
RAPID TECHNOLOGICAL CHANGE; NEW PRODUCT DELAYS; RISK OF SERVICE FAILURES
The Company's future success will depend on its ability to enhance its
existing services, to develop new products and services that address the needs
of its customers and to respond to technological advances and emerging
industry standards and practices, each on a timely basis. Services as complex
as those offered by the Company entail significant technical risks, often
encounter development delays and may result in service failures when first
introduced or as new versions are released. Any such delays in development or
failures that occur after commercial introduction of new or enhanced services
may result in loss of or delay in market acceptance, which could have a
material adverse effect upon the Company's business and results of operations.
RISK OF SYSTEM FAILURE OR INADEQUACY
The Company's operations are dependent on its ability to maintain its
computer and telecommunications systems in effective working order and to
protect its systems against damage from fire, natural disaster, power loss,
telecommunications failure or similar events. The Company's principal computer
and telecommunications equipment, including its processing operations, is
located at its headquarters facility in Burlington, Massachusetts. Although
the Company has limited back-up capability, this measure does not eliminate
the significant risk to the Company's operations from a natural disaster or
system failure at its principal site. In addition, any failure or delay in the
timely transmission or receipt of feeds and computer downloads from its
information providers, whether on account of system failure of the information
providers, the public network or otherwise, could disrupt the Company's
operations.
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DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISK OF THIRD PARTY CLAIMS FOR
INFRINGEMENT; POSSIBLE TRADEMARK INFRINGEMENT CLAIMS
The Company's success is dependent to a significant degree on its
proprietary technology. The Company relies on a combination of trade secret,
copyright and trademark laws, non-disclosure agreements with employees and
third parties, and contractual provisions to establish and protect its
proprietary rights. Despite these efforts, unauthorized parties may attempt to
copy aspects of the Company's services or to obtain and use information that
the Company regards as proprietary. There can be no assurance that the
protective measures taken by the Company will be adequate or that the
competitors will not independently develop technologies that are substantially
equivalent or superior to those of the Company. The Company may also be
subject to litigation to defend against claimed infringement of the
intellectual property rights of others. Adverse determinations in such
litigation could result in the loss of the Company's proprietary rights,
subject the Company to significant liabilities, require the Company to seek
licenses from third parties, and prevent the Company from selling its
services, any one of which could have a material adverse effect on the
Company's business and results of operations.
DEPENDENCE ON STRATEGIC RELATIONSHIPS
The Company has entered into certain cooperative marketing agreements and
informal arrangements with software vendors, Web site sponsors and operators
of on-line networks, including Microsoft, Netscape, Infoseek and NETCOM. These
companies do not presently market services that compete directly with those of
the Company. If the Company's marketing activities with such companies were
terminated, reduced, curtailed, or otherwise modified, the Company may not be
able to replace or supplement such efforts alone or with others. If these
companies were to develop and market their own business information services
or those of the Company's competitors, the Company's business and results of
operations may be materially and adversely affected.
RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION
A key component of the Company's strategy is its planned expansion into
international markets. To date, the Company has only limited experience in
marketing, selling, and delivering its products and services internationally.
There can be no assurance that the Company will be able to successfully
market, sell, and deliver its products and services in international markets.
RISKS ASSOCIATED WITH SECURITIES LITIGATION
A class action shareholder suit has been filed against the Company,
certain of its directors and officers and the underwriters of its initial
public offering claiming that the defendants made misstatements, or failed to
make statements, to the investing public in the IPO Prospectus and
Registration Statement, as well as in subsequent public disclosures, relating
to the alleged existence of disputes between Joseph A. Amram and the Company.
The Company believes that the allegations contained in the complaint are
without merit and intends to defend vigorously against the claims. However,
the lawsuit is in its earliest stages, and no estimate of possible loss, if
any, can currently be made. There can be no assurance that this litigation
will ultimately be resolved on terms that are favorable to the Company and
that the resolution of this litigation will not have a material adverse effect
on the Company.
Due to all of the foregoing factors, it is possible that in some future
quarter the Company's results of operations will be below the expectations of
public market analysts and investors. In such event, the price of the
Company's Common Stock would likely be materially adversely affected.
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USE OF PROCEEDS
The Company will not receive any proceeds from the resale of the Shares
by the Selling Stockholders hereunder. See "Selling Stockholders" and "Plan
of Distribution."
SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Shares as of August 29, 1997 and the number of Shares which
may be offered for the account of the Selling Stockholders or their
transferees or distributees from time to time. The shares may be offered from
time to time by the Selling Stockholders. Because the Selling Stockholders
may sell all or any part of their Shares pursuant to this Prospectus, no
estimate can be given as to the number of Shares that will be held by the
Selling Stockholders upon termination of this offer. See "Plan of
Distribution."
<TABLE>
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NUMBER OF SHARES
NUMBER OF SHARES OFFERED NUMBER OF SHARES
BENEFICIALLY OWNED PURSUANT TO THIS BENEFICIALLY OWNED
PRIOR TO OFFERING (1) PROSPECTUS AFTER OFFERING (2)
--------------------- ---------- ------------------
SELLING STOCKHOLDERS NUMBER PERCENT (3) NUMBER PERCENT (4) NUMBER PERCENT (3)
- ---------------------------- ---------- ----------- ---------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Brad Templeton . . . . . . . 1,099,939 6.76% 1,099,939 6.76% 0 0.00%
Roy E. Folk. . . . . . . . . 206,375 1.27 206,375 1.27 0 0.00%
Gregory M. Maples. . . . . . 4,939 * 4,939 * 0 0.00%
Aaron R. Priven(5) . . . . . 3,292 * 2,195 * 0 0.00%
Angela L. Stuart . . . . . . 439 * 439 * 0 0.00%
Douglas G. Miller(6) . . . . 7,135 * 219 * 0 0.00%
Maximilian L. Garrone. . . . 109 * 109 * 0 0.00%
Michael H. Rehmus(7) . . . . 3,293 * 21 * 0 0.00%
Broadview Associates LLC . . 100,000(8) * 250,000(8) 1.50 0 0.00%
The Parthenon Group. . . . . 75,294 * 75,294 * 0 0.00%
Knowledge Factory Partners,. 50,000 * 50,000 * 0 0.00%
L.L.C.(9).
TOTAL(10). . . . . . . . . . 1,550,815 9.32% 1,689,530 10.16% 0 0.00%
_________________
<FN>
*Less than 1% of the outstanding Common Stock.
(1) The persons and entities named in the above table have sole voting and investment power
with respect to all shares shown as beneficially owned by them. Beneficial ownership is determined
in accordance with the rules of the Commission, and includes voting and investment power with
respect to shares. Common Stock subject to options and warrants currently exercisable or
exercisable within 60 days after August 29, 1997 are deemed outstanding for the purposes of
computing the percentage ownership of the person holding such options and , but are not deemed
outstanding for computing the percentage of any other person.
(2) Assumes that all of the Shares owned by each Selling Stockholder and offered pursuant to
this Prospectus are sold. The Selling Stockholders may sell all or any part of their Shares
pursuant to this Prospectus.
(3) The number of shares of Common Stock deemed outstanding for calculation of beneficial
ownership includes (i) 16,269,547 shares of Common Stock outstanding as of August 29, 1997 and (ii)
all Common Stock underlying options, warrants and other convertible securities which are
exercisable or convertible within 60 days after August 29, 1997 by the person or entity in
question.
(4) The number of shares of Common Stock outstanding as of August 29, 1997 is 16,269,547.
(5) Includes 1,097 shares of Common Stock subject to options currently exercisable or
exercisable within 60 days after August 29, 1997.
(6) Includes 6,916 shares of Common Stock subject to options currently exercisable or
exercisable within 60 days after August 29, 1997.
(7) Includes 3,272 shares of Common Stock subject to options currently exercisable or
exercisable within 60 days after August 29, 1997.
(8) As of September 11, 1997, the Company had issued Broadview 100,000 shares of Common Stock
pursuant to the terms and conditions of the Fee Payment Agreement (as defined below). The number
of shares to be offered by Broadview pursuant to this Registration Statement is an estimate - the
actual number of shares that will be beneficially owned by Broadview as of the effectiveness of
this Registration Statement and to be registered herein for resale on behalf of Broadview shall be
determined based upon the average closing price of the Company's Common Stock during a period
immediately preceding the effective date of this Registration Statement. See "Plan of
Distribution."
(9) Consists of 50,000 shares of Common Stock Knowledge Factory Partners, L.L.C. has the right
to acquire upon the exercise of an outstanding warrant expiring on June 6, 2002.
(10) Includes 11,285 shares of Common Stock subject to options and warrants currently
exercisable or exercisable within 60 days after August 29, 1997.
</TABLE>
To the best of the Company's Knowledge, none of the Selling Stockholders
has had any material relationship with the Company or any of its affiliates
within the three-year period ending on the date of this Prospectus.
PLAN OF DISTRIBUTION
The Company has undertaken to register the resale of an aggregate of
1,639,530 outstanding shares of Common Stock held by certain of the Selling
Stockholders named herein, as well as the issuance and resale of 50,000 shares
of Common Stock which may be issued upon the exercise of a Common Stock
Purchase Warrant held by a Selling Stockholder. The Shares offered hereby may
be sold from time to time by the Selling Stockholders for their own accounts.
The Company will receive none of the proceeds from this offering. The Selling
Stockholders will pay or assume brokerage commissions or other charges and
expenses incurred in the resale of the Shares. Each of the transactions,
arrangements and agreements giving rise to the Company's registration of the
Shares on behalf of the Selling Stockholders is described below.
CLARINET COMMUNICATIONS CORP. ACQUISITION. On June 18, 1997, pursuant to
the terms and conditions of an Agreement and Plan of Reorganization dated June
13, 1997 by and among the Company, ClariNet, CN Merger Corp. and certain
shareholders of ClariNet, the Company acquired (the "ClariNet Acquisition")
ClariNet through a subsidiary merger in which each of the outstanding shares
of Common Stock of ClariNet, no par value per share, was converted into the
right to receive 0.21954874 shares of Common Stock of the Company. Of the
Shares offered hereby, 1,314,236 of such Shares were received by
non-dissenting shareholders of ClariNet in exchange for their shares of
ClariNet Common Stock in the ClariNet Acquisition. The Company agreed to use
its best efforts to file a Registration Statement as soon as reasonably
practicable after the effectiveness of the ClariNet Acquisition to register
the resale of the Shares received by the shareholders of ClariNet in the
ClariNet Acquisition.
BROADVIEW SHARES. In connection with the ClariNet Acquisition, the
Company entered into a Fee Payment Agreement (the "Fee Payment Agreement")
with Broadview Associates LLC ("Broadview") pursuant to which the Company
agreed, upon consummation of the ClariNet Acquisition, to assume ClariNet's
obligation to pay Broadview $500,000 (the "Broadview Fee") for services
provided in connection with the ClariNet Acquisition. The Broadview Fee is
payable in cash and/or shares of Common Stock at the Company's discretion. In
the event that the Company elects to issue shares of Common Stock to Broadview
(the "Broadview Shares") as payment of the Broadview Fee, the number of
Broadview Shares to be issued shall be determined based upon the average
closing price of the Company's Common Stock during a period immediately
preceding the effective date of this Registration Statement subject to the
terms and conditions of the Fee Payment Agreement. The Company agreed to use
its best efforts to file a Registration Statement as soon as reasonably
practicable after the effectiveness of the ClariNet Acquisition to register
the resale of the Broadview Shares.
PARTHENON SHARES. In connection with the performance by The Parthenon
Group ("Parthenon") of certain consulting services for the Company, the
Company issued 75,294 shares of Common Stock to Parthenon (the "Parthenon
Shares"). The Company agreed to register the resale of the Parthenon Shares.
COMPANYLINK WARRANT. In connection with its purchase of certain of the
assets of the CompanyLink business from Knowledge Factory Partners, L.L.C.
("Knowledge Factory Partners"), on June 6, 1997 the Company granted Knowledge
Factory Partners a Common Stock Purchase Warrant (the "CompanyLink Warrant")
dated June 6, 1997, exercisable to purchase 50,000 shares of Common Stock (the
"Company Link Shares") on or before June 6, 2002 at an exercise price of $5.25
per share. The Company agreed to use its reasonable best efforts to register
the resale of the CompanyLink Shares.
Resales of the Shares by the Selling Stockholders are not subject to any
underwriting agreement. The Shares covered by this Prospectus may be sold by
the Selling Stockholders or by pledgees, donees, transferees or other
successors in interest. The Shares offered by each Selling Stockholder may be
sold from time to time at market prices prevailing at the time of sale, at
prices relating to such prevailing market prices or at negotiated prices.
Such sales may be effected in the over-the-counter market, on the National
Association of Securities Dealers Automated Quotation System, on the Nasdaq
National Market, or on any exchange on which the Shares may then be listed.
The Shares may be sold by one or more of the following: (a) one or more block
trades in which a broker or dealer so engaged will attempt to sell all or a
portion of the Shares held by the Selling Stockholders as agent but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (d) in negotiated transactions. The Selling Stockholders may
effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions, commissions, or fees from the Selling Stockholders
and/or purchasers of the Shares for whom such broker-dealers may act as agent
or to whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). Any
broker-dealers that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be underwriters and any
commissions received by them and any profit on the resale of the Shares
positioned by them might be deemed to be underwriting compensation, within the
meaning of the Securities Act, in connection with such sales.
Pursuant to the terms of the Registration Rights Agreement dated as of
June 18, 1997 by and among the Company, Broadview, and certain shareholders of
ClariNet (the "Registration Rights Agreement"), the Company intends to
maintain the effectiveness of this Prospectus until the earlier of (i) June
18, 1999 or (ii) the date on which each Selling Stockholder (as defined in the
Registration Rights Agreement) may sell all Shares held by such Selling
Stockholder without restriction by the volume restrictions of Rule 144(e);
provided, however, that the rights of the Selling Stockholders to resell the
Shares pursuant to this Registration Statement may be suspended by the Company
under certain circumstances relating to pending corporate developments and
public filings with the Commission and similar events, as set forth in the
Registration Rights Agreement.
The Registration Rights Agreement provides that the Company will
indemnify the Selling Stockholders for any losses incurred by them in
connection with actions arising from any untrue statement of material fact in
the Registration Statement or any omission of a material fact required
therein, unless such statement or omission was made in reliance on written
information furnished to the Company by the Selling Stockholders. Similarly,
such agreement provides that each Selling Stockholder will indemnify the
Company and its officers and directors for any losses incurred by them in
connection with any actions arising from any untrue statement of material fact
in the Registration Statement or any omission of a material fact required
therein, if such statement or omission was made in reliance on written
information furnished to the Company by such Selling Stockholders.
The Company has informed the Selling Stockholders that the
antimanipulation rules under the Securities Exchange Act of 1934 (including,
without limitation, Rule 10b-5 and Regulation M - Rule 102) may apply to sales
in the market and will furnish the Selling Stockholders upon request with a
copy of these Rules. The Company will also inform the Selling Stockholders of
the need for delivery of copies of this Prospectus.
Any Shares covered by this Prospectus that qualify for resale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
LEGAL MATTERS
Certain legal matters with respect to the issuance of the Shares are
being passed upon for the Company by Testa, Hurwitz & Thibeault, LLP, Boston,
Massachusetts.
EXPERTS
The consolidated financial statements of Individual, Inc. included in the
report on Form 10-K of the Company for the fiscal year ended December 31, 1996
referred to above have been audited by Coopers & Lybrand L.L.P., independent
accountants, as set forth in their report dated February 15, 1997,
accompanying such financial statements, and are incorporated herein by
reference in reliance upon the report of such firm, which report is given upon
their authority as experts in accounting and auditing.
Any financial statements and schedules hereafter incorporated by
reference in the Registration Statement of which this prospectus is a part
that have been audited and are the subject of a report by independent
accountants will be so incorporated by reference in reliance upon such reports
and upon the authority of such firms as experts in accounting and auditing to
the extent covered by consents filed with the Commission.
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with this
offering other than those contained in this prospectus, and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company, any of the Selling Stockholders or any other
person. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities other than the registered
securities to which it relates or an offer to, or a solicitation of, any
person in any jurisdiction where such offer or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that there has been no change
in the affairs of the company since the date hereof or that the information
contained herein is correct as of any time subsequent to the date hereof.
_________________________
TABLE OF CONTENTS
_________________________
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information. . . . . . . . 2
Incorporation of Certain Information
by Reference. . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . 4
Use of Proceeds. . . . . . . . . . . 8
Selling Stockholders . . . . . . . . 8
Plan of Distribution . . . . . . . . 9
Legal Matters. . . . . . . . . . . . 11
Experts. . . . . . . . . . . . . . . 11
</TABLE>
1,689,530 SHARES
INDIVIDUAL, INC.
COMMON STOCK
_______________________
PROSPECTUS
________________________
September 11, 1997
==================
II-6
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses payable in connection with the sale of the Common
Stock offered hereby are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration fee . . . . $ 1,665
Legal fees and expenses. . . $15,000
Accounting Fees and expenses $ 7,000
Miscellaneous. . . . . . . . $ 1,000
Total . . . . . . . . . . . $24,665
</TABLE>
The Company will bear all expenses shown above. All amounts other than
the SEC Registration fee are estimated solely for the purpose of this
offering.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law and the Company's Charter and
By-laws provide for indemnification of the Company's directors and officers
for liabilities and expenses that they may incur in such capacities. In
general, directors and officers are indemnified with respect to actions taken
in good faith in a manner reasonably believed to be in, or not opposed to, the
best interests of the Company, and with respect to any criminal action or
proceeding, actions that the indemnitee had no reasonable cause to believe
were unlawful. Reference is made to the Company's Charter and By-laws filed
as Exhibits 3.3 and 3.5 to the Company's Registration Statement on Form S-1
filed on January 31, 1996 (No. 333-00792), respectively.
The Underwriting Agreement executed in connection with the Company's
initial public offering provides that the Underwriters are obligated, under
certain circumstances, to indemnify directors, officers and controlling
persons of the Company against certain liabilities, including liabilities
under the Securities Act. Reference is made to the form of Underwriting
Agreement filed as Exhibit 1.1 to the Company's Registration Statement on Form
S-1 filed on January 31, 1996 (File No. 333-00792).
In addition, the Registration Rights Agreement provides that the Selling
Stockholders are obligated, under certain circumstances, to indemnify the
Company and its directors and officers against certain liabilities, including
liabilities under the Securities Act. Reference is made to the Registration
Rights Agreement filed as Exhibit 99.1 to the Company's Current Report on Form
8-K, filed on July 3, 1997.
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibits:
- ---------
<S> <C>
2.1 . . . Agreement and plan of Reorganization dated as of June 13, 1997 by and among Individual, Inc.,
CN Merger Corp., ClariNet Communications Corp., and certain Shareholders of ClariNet
Communications Corp. (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K (the
"Form 8-K") filed on July 3, 1997 and incorporated herein by reference thereto).
4.1 . . . Specimen certificate representing the Common Stock (filed as Exhibit 4.1 to the Company's
Registration Statement on Form S-1 filed on January 31, 1996 as amended (File No. 333-00792)
and incorporated herein by reference thereto).
4.2 . . . Common Stock Purchase Warrant dated June 6, 1997, exercisable to purchase 50,000 shares of
Common Stock of Individual, Inc. issued to Knowledge Factory Partners.
5.1 . . . Opinion of Testa, Hurwitz & Thibeault, LLP.
23.1. . . Consent of Coopers & Lybrand L.L.P.
23.2. . . Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1).
24.1. . . Power of Attorney (included as part of the signature page on page II-4 of this Registration
Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
(iv) provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the 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 Securities Act of 1933 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Burlington, Commonwealth
of Massachusetts on September 11, 1997.
INDIVIDUAL, INC.
By: /s/Robert L. Lentz
Robert L. Lentz
Senior Vice President, Finance and Administration and, Chief
Financial Officer, Treasurer and Secretary
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Individual, Inc., hereby
severally constitute and appoint Michael E. Kolowich and Robert L. Lentz, and
each of them singly, our true and lawful attorneys, with full power to them
and each of them singly, to sign for us in our names in the capacities
indicated below, all pre-effective and post-effective amendments to this
registration statement, any registration statement in connection with this
Offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended and generally to do all things in our names
and on our behalf in such capacities to enable Individual, Inc. to comply with
the provisions of the Securities Act of 1933, as amended, and all requirements
of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
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(s) Date
- ------------------------- --------------------------------------------- ------------------
<S> <C> <C>
/s/ Michael E. Kolowich . Chairman of the Board, President and Chief September 5, 1997
- -------------------------
Michael E. Kolowich . . . Executive Officer
Senior Vice President, Finance and
/s/ Robert L. Lentz . . . Administration, Chief Financial Officer, September 8, 1997
- -------------------------
Robert L. Lentz . . . . . Treasurer and Secretary (Principal Financial
and Accounting Officer)
/s/ Joseph A. Amram . . . Director September 10, 1997
- -------------------------
Joseph A. Amram
/s/ James D. Daniell. . . Director September 7, 1997
- -------------------------
James D. Daniell
/s/ William A. Devereaux Director September 8, 1997
William A. Devereaux
/s/ Jeffery S. Galt . . . Director September 5, 1997
- -------------------------
Jeffery S. Galt
/s/ Elon Kohlberg . . . . Director September 5, 1997
- -------------------------
Elon Kohlberg
/s/ Marino R. Polestra. . Director September 10, 1997
- -------------------------
Marino R. Polestra
/s/Gregory Stanger. . . . Director September 8 , 1997
- -------------------------
Gregory S. Stanger
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- -------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and plan of Reorganization dated as of June 13, 1997 by and among
Individual, Inc., CN Merger Corp., ClariNet Communications Corp., and certain
Shareholders of ClariNet Communications Corp. (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K (the "Form 8-K") filed on July 3, 1997
and incorporated herein by reference thereto).
4.1 Specimen certificate representing the Common Stock (filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-1 filed on January 31, 1996 as
amended (File No. 333-00792) and incorporated herein by reference thereto).
4.2 Common Stock Purchase Warrant dated June 6, 1997, exercisable to purchase
50,000 shares of Common Stock of Individual, Inc. issued to Knowledge Factory
Partners.
5.1 Opinion of Testa, Hurwitz & Thibeault, LLP.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included as part of the signature page on page II-4 of this
Registration Statement).
</TABLE>
EXHIBIT 4.2
<PAGE>
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGIS-TERED UNDER THE
SECURITIES ACT OF 1933, AND SUCH WARRANT MAY NOT BE SOLD OR TRANSFERRED UNLESS
SUCH SALE OR TRANSFER IS IN ACCOR-DANCE WITH THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933, AS AT THE TIME AMENDED, OR IN CONFORMITY WITH THE
LIMITATIONS OF RULE 144 OR SIMILAR RULE AS THEN IN EFFECT UNDER SUCH ACT, OR
UNLESS SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE WITH RESPECT THERETO.
No. APW-1 50,000 Shares
of Common Stock
INDIVIDUAL, INC.
STOCK PURCHASE WARRANT
Void after June 6, 2002
Individual, Inc., a Delaware corporation (the "Company"), hereby
certifies that Knowledge Factory Partners, L.L.C. (the "Warrantholder"), for
value received, or its assigns, is entitled, subject to the terms set forth
below, to purchase from the Company at any time or from time to time before
the Expiration Date, as defined in Section 1, that number of fully paid and
nonassessable shares of the Common Stock of the Company (the "Common Stock")
set forth above at an exercise price of $5.25 per share (subject to adjustment
pursuant to Section 6). This Warrant is issued pursuant to the terms and
conditions of that certain Asset Purchase Agreement dated as of June 6, 1997
among the Company, the Warrantholder, and Delphi Internet Services
Corporation.
As used herein the following terms, unless the context other-wise
requires, have the following respective meanings:
The term "Company" includes any corporation which shall suc-ceed to or
assume the obligations of the Company hereunder.
The term "Stock" shall mean the class of Common Stock of the Company and
any other securities or property of the Company or of any other person
(corporate or otherwise) which the Warrantholder at any time shall be entitled
to receive on the exercise hereof in lieu of or in addition to such Common
Stock, or which at any time shall be issuable in exchange for or in
replacement of such Common Stock.
1. Initial Exercise Date; Expiration. Subject to the provisions of
---------------------------------
Section 2, this Warrant may be exercised at any time or from time to time. It
shall expire at 5:00 p.m., Eastern time, on June 6, 2002 (the "Expiration
Date").
2. Exercise of Warrant; Redemption. (a) This Warrant may be
----------------------------------
exercised in full or in part by the holder hereof by surrender of this
Warrant, with the form of "cash exercise" subscription attached hereto (the
"Exercise Notice") duly executed by such holder, to the Company at its
principal office, accompanied by payment, in cash or by certified or official
bank check payable to the order of the Company, of the purchase price of the
shares of Stock to be purchased hereunder.
(b) The Warrantholder may elect to receive, without the payment by
the Warrantholder of any additional consideration, shares equal to the value
of this Warrant or any portion hereof by the surrender of this Warrant or such
portion to the Company, with the redemption notice attached hereto (the
"Redemption Notice") duly executed, at the office of the Company. Thereupon,
the Company shall issue to the Warrantholder such number of fully paid and
nonassessable shares of Stock as is computed using the following formula:
X = Y (A-B)
-------
A
where X = the number of shares to be issued to the Warrantholder
pursuant to this Section 2(b).
Y = the number of shares covered by this Warrant in respect of which
the net issue election is made pursuant to this Section 2(b).
A = the fair market value ("FMV") of one share of Common Stock, as
determined below, as at the time the net issue election is made pursuant to
this Section 2(b).
B = the Purchase Price in effect under this Warrant at the time the net
issue election is made pursuant to this Section 2(b).
For the purposes of this Section 2(b), FMV shall be determined at
the time of exercise and shall mean: (A) if the Common Stock is then publicly
traded, the average closing price in the over-the-counter market as reported
by NASDAQ or as quoted in the NASDAQ National Market System or on any national
securities exchange on which the Common Stock is traded for the ten (10) prior
trading days, or (B) if the Common Stock is not then publicly traded, the
price per share of Common Stock or Common Stock equivalent paid by investors
to purchase the Common Stock or Common Stock equivalent of the Company (taking
into account any consideration paid separately to acquire any security which
is exercisable for or convertible into Common Stock) in any arm's length
equity financing completed within the preceding six (6) months, or, if no such
equity financing has so occurred, a fair value as determined in good faith by
the Board of Directors of the Company (the "Board") or (C) in the case of a
Business Combination, the price per share of Common Stock paid in the Business
Combination or, if such payment is made by property other than cash, the fair
value of such property paid per share of Common Stock in the Business
Combination as determined in good faith by the Board. In the event that this
Warrant is exercised pursuant to this Section 2(b) in connection with a
Business Combination, the Company may elect to treat such exercise in
accordance with Section 5(d). In the event the Common Stock is not publicly
traded, the Board of Directors of the Company shall promptly respond in
writing to a reasonable inquiry by the holder hereof as to the fair market
value of the Common Stock for purposes of this Section 2(b).
(c) For any partial exercise or redemption pursuant to Section
2(a) or 2(b) hereof, the Warrantholder shall designate in the Exercise Notice
or Redemption Notice (as the case may be) the number of shares of Stock that
it wishes to purchase or the aggregate number of underlying shares of Stock
represented by the portion of the Warrant it wishes to redeem (as the case may
be). On any such partial exercise or redemption, the Company at its expense
shall forthwith issue and deliver to the Warrantholder a new warrant of like
tenor, in the name of the Warrantholder, which shall be exercisable for such
number of shares of Stock represented by this Warrant which have not been
purchased upon such exercise or redeemed.
3. When Exercise or Redemption Effective. The exercise or redemption
-------------------------------------
of this Warrant shall be deemed to have been effected immediately prior to the
close of business on the business day on which this Warrant is surrendered to
the Company as provided in Section 2(a) or 2(b) (as the case may be).
4. Delivery on Exercise or Redemption. As soon as practicable after
----------------------------------
the exercise or redemption of this Warrant in full or in part pursuant to
Section 2(a) or 2(b), as the case may be, and in any event within five (5)
business days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the Warrantholder, or as such Warrantholder may direct, a
certificate or certificates for the number of fully paid and nonassessable
full shares of Stock to which such holder shall be entitled on such exercise
or redemption, together with cash, in lieu of any fraction of a share, equal
to such fraction of the then FMV of one full share as determined in accordance
with Section 2(b).
5. Business Combinations.
----------------------
(a) In event of any merger, consolidation or sale of the
outstanding capital stock of the Company (in a single transaction or related
series of transactions), resulting in a change of ownership of two-thirds or
more of the voting power of the Company, or in the event of a sale of all or
substantially all of the assets of the Company (such merger, consolidation or
sale referred to hereinafter as a "Business Combination"), the Company shall
have the right at any time or times to redeem this Warrant in full or in part
in accordance with Section 2(b) and this Section 5.
(b) At least 10 days before the date fixed by the Company for
redemption pursuant to this Section 5, the Company shall mail, postage
prepaid, written notice to the Warrantholder (the "Company Redemption
Notice"), at his address shown on the records of the Company; provided,
--------
however, that the Company's failure to give the Company Redemption Notice
-
shall in no way affect its right to redeem this Warrant as provided herein.
The Company Redemption Notice shall contain the following information:
(i) The redemption date(s);
(ii) The applicable FMV of the Common Stock determined in
accordance with Section 2(b) and the number of shares of Stock issuable to the
Warrantholder upon redemption; and
(iii) A statement that the Warrantholder is to surrender this
Warrant to the Company, at the place designated.
(c) The Warrantholder shall surrender this Warrant to the
Company at the place designated in the Company Redemption Notice. Thereupon,
there shall be issued to the Warrantholder a certificate or certificates for
the number of shares of Stock issuable pursuant to Section 2(b) (or such other
consideration as may be payable pursuant to Section 5(d)). The Company shall
not be obligated to issue certificates evidencing such shares of Stock or
other consideration unless this Warrant is either delivered to the Company or
any transfer agent designated by the Company or unless the Warrantholder
notifies the Company or such transfer agent that this Warrant has been lost,
stolen or destroyed and executes an agreement satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection therewith.
(d) In lieu of issuing shares of Stock upon redemption of this
Warrant, the Company may, at its election, pay or issue, or cause to be paid
or issued, to the Warrantholder the amount of cash or number of shares of
Stock or other securities or property of the Company, or of the successor
corporation, resulting from the Business Combination to which such holder
would have been entitled upon such date if such holder had redeemed this
Warrant pursuant to Section 2(b) immediately prior thereto.
(e) In case at any time and from time to time, the Company shall
effect a Business Combination and the Company does not exercise its right to
redeem this Warrant in accordance with the foregoing provisions of this
Section 5, then in such case, the holder of this Warrant, on the exercise
hereof pursuant to Section 1 at any time after the date of the consummation of
such Business Combination, shall receive, in lieu of the Common Stock or other
securities that would have been issuable upon such exercise prior to the
consummation of the Business Combination, the amount of cash or number of
shares of Stock or other securities or property of the Company, or of the
successor corporation, to which such holder would have been entitled upon the
consummation of such Business Combination if such holder had so exercised this
Warrant immediately prior thereto, all subject to further adjustment as
provided in Section 6 below.
6. Adjustment of Purchase Price and Number of Shares. The character
-------------------------------------------------
of the shares of Stock issuable upon exercise or redemption of this Warrant
(or any shares of stock or other securities at the time issuable upon exercise
or redemption of this Warrant) and the purchase price therefor, are subject to
adjustment upon the occurrence of the following events:
(a) Adjustment for Stock Splits, Stock Dividends,
--------------------------------------------------
Recapitalizations, etc. The exercise price of this Warrant and the number of
----------
shares of Stock issuable upon exercise or redemption of this Warrant (or any
shares of stock or other securities at the time issuable upon exercise or
redemption of this Warrant) shall be appropriately adjusted to reflect any
stock dividend, stock split, combination of shares, reclassification,
recapitalization or other similar event affecting the number of outstanding
shares of Stock (or such other stock or securities). For example, if there
should be a 2-for-1 stock split, the exercise price would be divided by two
and such number of shares would be doubled.
(b) Adjustment for Other Dividends and Distributions. In case
------------------------------------------------
the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other
distribution after June 6, 1997 with respect to the Stock (or any shares of
stock or other securities at the time issuable upon exercise or redemption of
the Warrant) payable in (i) securities of the Company (other than shares of
Stock) or (ii) assets (excluding cash dividends paid or payable solely out of
current or retained earnings), then, in each case, the holder of this Warrant
on exercise or redemption hereof at any time after the consummation, effective
date or record date of such event, shall receive, in addition to the Stock (or
such other stock or securities) issuable on such exercise or redemption prior
to such date, the securities or such other assets of the Company to which such
holder would have been entitled upon such date if such holder had exercised or
redeemed this Warrant immediately prior thereto (all subject to further
adjustment as provided in this Warrant).
(c) Certificate as to Adjustments. In case of any adjustment or
-----------------------------
readjustment in the price or kind of securities issuable on the exercise or
redemption of this Warrant, the Company will promptly give written notice
thereof to the holder of this Warrant in the form of a certificate, certified
and confirmed by the President of the Company, setting forth such adjustment
or readjustment and showing in reasonable detail the facts upon which such
adjustment or readjustment is based.
7. No Impairment. The Company will not, by amendment of its
--------------
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment. Without limiting the
generality of the foregoing the Company (a) will not increase the par value of
any shares of stock receivable on the exercise or redemption of this Warrant
above the amount payable therefor on such exercise or redemption, (b) will at
all times reserve and keep available a number of its authorized shares of
Stock, free from all preemptive rights therein, which will be sufficient to
permit the exercise or redemption of this Warrant by the Warrantholder, and
(c) shall take all such action as may be necessary or appropriate in order
that all shares of Stock as may be issued pursuant to the exercise or
redemption of this Warrant will, upon issuance, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof.
8. Notices of Record Date, etc. In the event of
--------------------------------
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class
or any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, or
any transfer of all or substantially all the assets of the Company to or
consolidation or merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(d) any proposed issue or grant by the Company of any shares of
any class or any other securities, or any right or option to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities,
then and in each such event the Company will mail to the holder hereof a
notice specifying (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date on which any
such reorgani-zation, reclassification, recapitalization, transfer,
consolida-tion, merger, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the holders of record
of Stock (or any shares of stock or other secu-rities at the time issuable
upon the exercise or redemption of this Warrant) shall be entitled to exchange
their shares for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall be mailed at least 10 days prior
to the date therein specified.
9. Exchange of Warrant. On surrender for exchange of this Warrant,
-------------------
properly endorsed, to the Company, the Company at its expense will issue and
deliver to, or on the order of, the holder thereof a new Warrant of like
tenor, in the name of such holder or in a name as such holder may direct,
calling in the aggregate on the face thereof for the number of shares of Stock
called for on the face of the Warrant so surrendered.
10. Replacement of Warrant. On receipt by the Company of evidence
----------------------
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
11. Investment Intent. Unless a current registration state-ment
-----------------
under the Securities Act of 1933, as amended, shall be in effect with respect
to the securities to be issued upon exercise or redemption of this Warrant,
the holder thereof, by accepting this Warrant, covenants and agrees that, at
the time of exercise or redemption hereof, and at the time of any proposed
transfer of securities acquired upon exercise or redemption hereof, such
holder will deliver to the Company a written statement that the securities
acquired by the holder upon exercise or redemption hereof are for the own
account of the holder for investment and are not acquire with a view to, or
for sale in connection with, any distribution thereof (or any portion thereof)
and with no present intention (at any such time) of offering and distributing
such securities (or any person thereof).
12. Transfer. Subject to compliance with applicable federal and
--------
state securities laws, this Warrant may be transferred by the Warrantholder
with respect to any or all of the shares purchasable hereunder. Upon
surrender of this Warrant to the Company, together with the assignment hereof
properly endorsed, for transfer of this Warrant as an entirety by the
Warrantholder, the Company shall issue a new warrant of the same denomination
to the assignee. Upon surrender of this Warrant to the Company, together with
the assignment hereof properly endorsed, by the Warrantholder for transfer
with respect to a portion of the shares of Common Stock purchasable hereunder,
the Company shall issue a new warrant to the assignee, in such denomination as
shall be requested by the Warrantholder hereof, and shall issue to such
Warrantholder a new warrant covering the number of shares in respect of which
this Warrant shall not have been transferred.
13. No Rights or Liability as a Stockholder. This Warrant does not
---------------------------------------
entitle the Warrantholder to any voting rights or other rights as a
stockholder of the Company. No provisions hereof, in the absence of
affirmative action by the Warrantholder to purchase Stock, and no enumeration
herein of the rights or privileges of the Warrantholder shall give rise to any
liability of such Warrantholder as a stockholder of the Company.
14. Damages. The Company recognizes and agrees that the
-------
Warrantholder will not have an adequate remedy if the Company fails to comply
with the terms of this Warrant and that damages will not be readily
ascertainable, and the Company expressly agrees that, in the event of such
failure, it shall not oppose an application by the holder of this Warrant or
any other person entitled to the benefits of this Warrant requiring specific
performance of any and all provisions hereof or enjoining the Company from
continuing to commit any such breach on the terms hereof.
15. Notices. All notices referred to in this Warrant shall be in
-------
writing and shall be delivered personally or by certified or registered mail,
return receipt requested, postage prepaid and will be deemed to have been
given when so delivered or mailed (i) to the Company, at its principal
executive offices and (ii) to the Warrantholder, at such Warrantholder's
address as it appears in the records of the Company (unless otherwise
indicated in accordance with the provisions of this Section 15 by such
holder).
16. Payment of Taxes. All shares of Stock issued upon the exercise
----------------
of this Warrant shall be validly issued, fully paid and nonassessable, and the
Company shall pay all taxes and other governmental charges that may be imposed
in respect to the issue or delivery thereof.
17. Miscellaneous. This Warrant and any term hereof may be changed,
-------------
waived, discharged or terminated only by an instrument in writing signed by
the Warrantholder and the Company. This Warrant shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.
The headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof.
[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
DATED: June 6, 1997
INDIVIDUAL, INC.
By:
Title:
[Corporate Seal]
Attest:
Assistant Secretary
<PAGE>
EXERCISE NOTICE
[To be signed only on exercise of Warrant]
TO: INDIVIDUAL, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects, in accordance with and subject to the provi-sions of Section 2(a) of
such Warrant, to exercise the purchase right represented by such Warrant for,
and to purchase thereunder, _________* shares of Common Stock of INDIVIDUAL,
INC. and herewith makes payment of $_________ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered to
___________________________, whose address is
______________________________________________________________.
______________________________
(Signature must conform in all
respects to name of holder as
specified on the fact of the
Warrant)
______________________________
______________________________
(Address)
Dated:
___________________________
*Insert here the number of shares as to which the Warrant is being exercised.
<PAGE>
**REDEMPTION NOTICE
[To be signed only on redemption of Warrant]
TO: INDIVIDUAL, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects, in accordance with and subject to the provi-sions of Section 2(b) of
such Warrant, to redeem, and to cause the Company to redeem, such Warrant with
respect to that portion of such Warrant representing __________ *underlying
shares of Common Stock of INDIVIDUAL, INC. The undersigned requests that the
certificates for the shares of Common Stock (or other securities or property
issuable under Section 5(d) of the Warrant) issuable upon redemption be issued
in the name of, and delivered to ___________________________________,
whose address is ____________________________________________.
______________________________
(Signature must conform in all
respects to name of holder as
specified on the fact of the
Warrant)
______________________________
______________________________
(Address)
Dated:
___________________________
*Insert here the number of underlying shares with respect to which the Warrant
is being redeemed.
<PAGE>
FORM OF ASSIGNMENT
[To be signed only on transfer of Warrant]
For value received, the undersigned hereby sells, assigns, and transfers
unto __________________________________ the right represented by the within
Warrant to purchase, in accordance with and subject to the provisions of such
Warrant, ________ shares of Common Stock of INDIVIDUAL, INC. to which the
within Warrant relates, and appoints the corporate Secretary or an Assistant
Secretary as Attorney to transfer such right on the books of Individual, Inc.
with full power of substitution in the premises.
______________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
______________________________
______________________________
(Address)
Dated:
___________________________
EXHIBIT 5.1
<PAGE>
September 11, 1997
INDIVIDUAL, INC.
8 New England Executive Park West
Burlington, MA 01803
RE: Registration Statement on Form S-3
Relating to 1,689,530 shares of Common Stock
--------------------------------------------------
Dear Sir or Madam:
We are counsel to INDIVIDUAL, INC., a Delaware corporation (the
"Company"), and have represented the Company in connection with the
preparation and filing of the Company's Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act of 1933, as amended,
covering an aggregate of 1,639,530 outstanding shares of the Company's Common
Stock, $.01 par value per share (the "Shares") and an aggregate of 50,000
shares of the Company's Common Stock, $.01 par value per share (the "Warrant
Shares") which are issuable upon exercise of a Common Stock Purchase Warrant
(the "Warrant") more particularly described in the Registration Statement and
filed as an Exhibit thereto.
We have reviewed the corporate proceedings taken by the Board of
Directors of the Company with respect to the authorization and issuance of the
Shares and the Warrant. We have also examined and relied upon originals or
copies, certified or otherwise authenticated to our satisfaction, of all
corporate records, documents, agreements or other instruments of the Company
and have made all investigations of law and have discussed with the Company's
officers all questions of fact that we have deemed necessary or appropriate.
Based upon and subject to the foregoing, we are of the opinion that the
Shares are legally issued, fully paid and non-assessable, and upon exercise of
the Warrant in accordance with its terms and conditions and payment as therein
provided, the Warrant Shares will have been legally issued and will be fully
paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm in the Prospectus
contained in the Registration Statement under the caption "Legal Matters."
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
- ----------------------------------------
Testa, Hurwitz & Thibeault, LLP
EXHIBIT 23.1
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
----------------------------------
We consent to the incorporation by reference in the registration
statement of Individual, Inc. on Form S-3 of our report dated February 15,
1997, on our audits of the consolidated financial statements of Individual,
Inc. as of December 31, 1996 and 1995 and for the years ended December 31,
1996, 1995 and 1994, which report is included in the Annual
Report on Form 10-K of Individual, Inc. for the year ended December 31, 1996.
We also consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
September 10, 1997
