<PAGE>
As filed with the Securities and Exchange Commission on April 16, 1998.
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
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LYCOS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3277338
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
400-2 TOTTEN POND ROAD
(781) 370-2700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------------------------
ROBERT J. DAVIS
LYCOS, INC.
400-2 TOTTEN POND ROAD
WALTHAM, MASSACHUSETTS 02154
(781) 370-2700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
MICHAEL J. RICCIO, JR., ESQ.
HUTCHINS, WHEELER & DITTMAR
A PROFESSIONAL CORPORATION
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 951-6600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable 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
investment 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, 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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Amount of
Securities to be Registered Registered Per Offering Registration Fee
Share (1) Price (1)
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<S> <C> <C> <C> <C>
Common Stock, par 55,547 $70.6875 $3,926,478.50 $1,158.31
value $.01 per share
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee,
based upon the average of the high and low prices of the Company's
Common Stock as reported on the Nasdaq National Market on April 15,
1998 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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ 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. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
55,547 SHARES
LYCOS, INC.
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of up to 55,547 shares of Common Stock, par value $0.01 per share
(the "Shares"), of Lycos, Inc. ("Lycos" or the "Company"), which may be offered
from time to time by certain stockholders of the Company or by donees,
transferees or other successors in interest that receive such shares as a gift
or other non-sale related transfer (the "Selling Stockholders"). The Company
will receive no part of the proceeds of such sales. Of the Shares being offered
(i) 50,452 Shares were originally issued by the Company in connection with the
Company's purchase of 1,915,709 shares of Series B Convertible Participating
Preferred Stock of Sage Enterprises, Inc., a Massachusetts corporation ("Sage")
and (ii) 5,095 Shares were issued to Bozell Worldwide, Inc. in connection with
the performance of certain services rendered to the Company. The Shares were
issued pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), provided for in
Section 4(2) thereunder. The Shares are being registered by the Company pursuant
to a Series B Preferred Stock Purchase Agreement dated as of April 13, 1998 (the
"Agreement") by and among Lycos, Sage and certain other parties and a letter
agreement between Lycos and Bozell.
The Shares may be offered by the Selling Stockholders from time to time in
one or more transactions as described under "Plan of Distribution." To the
extent required, the number of shares to be sold, the name of the Selling
Stockholder(s), the purchase price, the name of any agent or broker-dealer, and
any applicable commissions, discounts or other items constituting a compensation
to such agent or broker-dealer with respect to a particular offering will be set
forth in a supplement or supplements to this Prospectus (each, a "Prospectus
Supplement"). The aggregate proceeds to the Selling Stockholder(s) from the sale
of the shares offered from time to time hereby will be the purchase price of the
shares sold less commissions, discounts and other compensation, if any, paid by
the Selling Stockholder(s) to any agent or broker-dealer. The price at which any
of the Shares may be sold, and the commissions, if any paid in connection with
any such sale, are unknown and may vary from transaction to transaction. The
Company will pay all expenses incident to the offering and sale of the Shares to
the public other than any commissions and discounts of underwriters, dealers or
agents and any transfer taxes. See "Selling Stockholders" and "Plan of
Distribution."
The Company's Common Stock is listed on the Nasdaq National Market under
the symbol "LCOS." On April 15, 1998, the last sale price of the Company's
Common Stock was $71.625 per share.
_________________________
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 3
HEREOF.
_________________________
The Securities and Exchange Commission (the "Commission") may take the view
that, under certain circumstances, the Selling Stockholders and any broker-
dealers or agents that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of the Securities Act. Commissions, discounts or concessions received by any
such broker-dealer or agent may be deemed to be underwriting commissions under
the Securities Act. The Company and the Selling Stockholders have agreed to
certain indemnification arrangements. See "Plan of Distribution."
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 __________, 1998
<PAGE>
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 and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
NW, Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048 and Chicago Regional Office, Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained by mail at prescribed rates from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549. The Commission maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the site is
http://www.sec.gov. The Common Stock of the Company is listed on the Nasdaq
National Market, and such reports, proxy and information statements and other
information concerning the Company may be inspected at the offices of Nasdaq
Operations, 1735 K Street, NW, Washington, D.C. 20006.
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 Commission under 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 offered hereby, reference
is hereby made to the Registration Statement. The Registration Statement may be
inspected at the public reference facilities maintained by the Commission at the
addresses set forth in the preceding paragraph. The Company has filed the
Registration Statement electronically with the Commission via the Commission's
Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Statements
contained herein concerning any document filed as an exhibit 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. Each such statement is
qualified in its entirety by such reference. The Company intends to distribute
to its stockholders annual reports containing audited financial statements and
will make available copies of quarterly reports for the first three quarters of
each fiscal year containing unaudited interim financial information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
0-27830) pursuant to the Exchange Act are hereby incorporated by reference in
this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended July 31,
1997;
(2) The Company's definitive Proxy Statement dated November 17, 1997,
filed in connection with the Company's December 17, 1997 Annual
Meeting of Stockholders;
(3) The Company's Quarterly Reports on Form 10-Q for the quarters ended
October 31, 1997 and January 31, 1998;
(4) The Company's Current Reports on Form 8-K and 8-K/A, filed with the
Commission on February 17, 1998, March 10, 1998 and March 24, 1998;
and
(5) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, filed with the Commission on
February 23, 1996.
All reports and other documents subsequently 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 into this Prospectus, to the extent required, and to
be a part of this Prospectus from the date of filing of such reports and
documents. Any statement contained in a document incorporated by reference into
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 that 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 hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated by reference into this Prospectus (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted in writing to Investor Relations, Lycos, Inc., 400-2 Totten
Pond Road, Waltham,, Massachusetts 02154 or by telephone at (781) 370-2700.
-2-
<PAGE>
THE COMPANY
Lycos, Inc., ("Lycos" or the Company") is a global Internet navigation and
community network dedicated to helping online users locate, retrieve and manage
information personalized to their individual interests by providing easy-to-use
information tools. The Company's comprehensive suite of products and services
enables users of the Internet to quickly, easily and accurately identify, select
and access the resources and information of interest to them. The Company's
objective is to establish the use of its Internet navigational products as the
premier method to find information in the world. With the Company's recent
acquisition of Tripod, Inc., it now offers Internet users the ability to create
personal home pages and join interest-based communities within Lycos' Tripod
Website. Lycos, "Your Personal Internet Guide", is dedicated to enriching each
user's online experience by providing a variety of visually appealing products
and services free of charge to users, including Web Search, Web Guides, Top 5%
Sites, Pictures & Sounds Search, Classifieds, Companies Online, PeopleFind,
RoadMaps, News, StockFind, Chat, Email, CityGuides, Yellow Pages, Personal Guide
and Homepages. The Company believes that its products are among the most popular
sites on the Web, serving millions of information requests per day.
The Company is a Delaware corporation incorporated in June 1995. The
Company's principal executive offices are located at 400-2 Totten Pond Road,
Waltham, Massachusetts 02154, and its telephone number is (781) 370-2700.
RISK FACTORS
The following risk factors should be considered in conjunction with the
other information included and incorporated by reference in this Prospectus
before purchasing the Common Stock offered hereby. This Prospectus (including
the documents incorporated by reference herein) may include forward-looking
statements that involve risks and uncertainties. In addition to those risk
factors discussed elsewhere in this Prospectus, the Company identifies the
following risk factors which could affect the Company's actual results and cause
actual results to differ materially from those in the forward-looking
statements.
Limited Operating History; Anticipation of Continued Losses. The Company
-----------------------------------------------------------
was founded in June 1995 and for the year ended July 31, 1997 generated revenues
of $22.3 million. Accordingly, the Company has a limited operating history upon
which an evaluation of the Company and its prospects can be based. The Company
and its prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stages of
development, particularly companies in new and rapidly evolving markets. The
Company has achieved only limited revenues to date. The limited operating
history of the Company makes the prediction of future results of operations
difficult or impossible, and therefore, the recent revenue growth experienced by
the Company should not be taken as indicative of the rate of growth, if any,
that can be expected in the future. There can be no assurance that the Company
will sustain revenue growth or achieve or sustain profitability. The Company
has incurred significant losses since inception and only recently became
profitable. As of January 31, 1998, the Company had an accumulated deficit of
$11.4 million.
Potential Fluctuations in Quarterly Results. As a result of the Company's
-------------------------------------------
limited operating history, the Company does not have historical financial data
for any significant period of time on which to base planned operating expenses.
The Company's expense levels are based in part on its expectations as to future
revenues and to a certain extent are fixed. Quarterly sales and operating
results generally depend on the advertising, electronic commerce, license fees
and other revenues received within the quarter, which are difficult to forecast.
Because the Company's expense levels are based upon anticipated advertising and
licensing revenue, the Company may not be able to adjust spending in a timely
manner to compensate for any unexpected revenue shortfall. Accordingly, any
significant shortfall in relation to the Company's expectations would have an
immediate adverse impact on the Company's business, results of operations and
financial condition. In addition, the Company plans to significantly increase
its operating expenses to fund greater levels of research and development,
increase its sales and marketing operations, develop new distribution channels,
broaden its customer support capabilities and establish brand identity and
strategic alliances. In the future, leading Websites, browser providers and
other distribution channels may require payments or other consideration in
exchange for providing access to the Company's products and services, such as
the Company's arrangements with Netscape Communications Corp. ("Netscape").
Additionally, the Company may incur costs pertaining to the introduction or
enhancement of services by the Company or the acquisition of businesses or
technologies. To the extent that such expenses precede or are not subsequently
followed by increased revenues, the Company's business, results of operations
and financial condition could be materially adversely affected.
The Company's operating results may fluctuate significantly in the future
as a result of a variety of factors, some of which are outside of the Company's
control. These factors include general economic conditions, specific economic
conditions in the Internet industry, usage of the Internet, the level of traffic
to the Company's Websites, demand for Internet advertising, seasonal trends in
advertising sales, the advertising budgeting cycles of individual advertisers,
capital expenditures and other costs relating to the expansion of operations,
the introduction of new products or services by the Company or its competitors,
the mix of the services sold, the channels through which those services are
sold, and pricing changes. As a strategic response to a changing competitive
environment, the Company may elect from time to time to make certain pricing,
service or marketing decisions or acquisitions that could have a material
adverse effect on the Company's business, results of operations and financial
condition. Due to the nascent nature of the Internet industry, the Company
believes that period to period comparisons of its operating results are not
meaningful and should not be relied upon for an indication of future
performance. The Company also has experienced, and expects to continue to
experience, seasonality in its business, with user traffic on the Company's site
-3-
<PAGE>
and affiliated sites being lower during the summer and year-end vacation and
holiday periods, when usage of the Web and the Company's services has typically
declined. Due to all of the foregoing factors and others that the Company cannot
predict, it is possible that in some future quarter, the Company's operating
results may 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.
Developing Market; Unproven Acceptance of the Company's Products and
--------------------------------------------------------------------
Services; Uncertain Adoption of the Internet as an Advertising Medium. The
- ---------------------------------------------------------------------
market for the Company's products and services 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 use
on the Internet. The Company's market is highly dependent upon the increased use
of the Internet for information publication, distribution and commerce, and on
the development of the Internet as an advertising medium. The Company's future
operating results will depend upon the growth of the Internet advertising
market, the successful implementation of the Company's advertising program and
its ability to establish licensing relationships and other strategic alliances
with leading Internet businesses. There can be no assurance, however, that the
Internet advertising market will develop as an attractive and sustainable
medium, that the Company will achieve or sustain market acceptance of its
products and services or that the Company will be able to execute its business
plan successfully. As is typical in the case of a new and rapidly evolving
industry, demand and market acceptance for recently introduced products and
services are subject to a high level of uncertainty. The industry is young and
has few proven products. Moreover, critical issues concerning the commercial use
of the Internet (including security, reliability, cost, ease of use and access,
quality of service and acceptance of advertising) remain unresolved and may
impact the growth of the Internet, or the placement of advertisements on the
Internet or the growth of the Internet as a means of electronic commerce. If
widespread commercial use of the Internet does not develop, or if the Internet
does not develop as an attractive medium for advertising, the Company's
business, results of operations and financial condition will be materially
adversely affected.
Because the market for the Company's products and services is new and
evolving, it is difficult to predict the size of this market and growth rate, if
any. There can be no assurance that the market for the Company's products and
services will develop or that demand for the Company's products or services will
emerge or become sustainable. If the market fails to develop, develops more
slowly than expected or becomes saturated with competitors, or if the Company's
products and services do not achieve or sustain market acceptance, the Company's
business, results of operations and financial condition will be materially
adversely affected.
Risks Associated with Brand Development. The Company believes that
---------------------------------------
establishing and maintaining the "Lycos" brand is a crucial aspect of its
efforts to continue to expand and attract its Internet audience and that the
importance of brand recognition will increase in the future due to the growing
number of Internet sites and the relatively low barriers to entry. Promotion and
enhancement of the "Lycos" brand will depend largely on the Company's ability to
provide consistently high-quality products and services, which cannot be
assured. If consumers do not perceive the Company's existing products and
services to be of high quality, or if the Company introduces new products and
services or enters into new business ventures that are not favorably received by
consumers, the Company will be unsuccessful in promoting and maintaining its
brand, and will risk diluting its brand and decreasing the attractiveness of its
audiences to advertisers.
Reliance on Advertising Revenues. The Company derives a significant portion
--------------------------------
of its revenues from the sale of advertisements on its Web pages. For the fiscal
quarter ended January 31, 1998, advertising revenues represented approximately
76% of the Company's total revenues. The Company's strategy is to continue to
develop advertising and other methods of generating revenues through the use of
its products and services. The Company is in the early stages of licensing its
products and technology and in implementing its advertising and electronic
commerce program. The Company's ability to generate significant advertising
revenues will depend, among other things, on advertisers' acceptance of the
Internet as an attractive and sustainable medium, the development of a large
base of users of the Company's products and services possessing demographic
characteristics attractive to advertisers, the expansion of the Company's
advertising sales force and the development of the Internet as an attractive
platform for electronic commerce. In addition, there is fluid and intense
competition in the sale of advertising on the Internet, resulting in a wide
range of rates quoted and a variety of pricing models offered by different
vendors for a variety of advertising services, which makes it difficult to
project future levels of advertising revenues that will be realized generally or
by any specific company. It is also difficult to predict which pricing models
will be adopted by the industry or advertisers. For example, advertising rates
based on the number of "click throughs" from the Company's network to
advertisers' pages, instead of rates based solely on the number of impressions,
could materially adversely affect the Company's revenues. In addition, "filter"
software programs that limit or remove advertising from the Web user's desktop
are available. The widespread adoption of such software by users could have a
material adverse effect on the viability of advertising on the Web. Accordingly,
there can be no assurance that the Company will be successful in generating
significant future advertising revenues, and the failure to do so would have a
material adverse effect on the Company's business results of operations and
financial condition. Further, significant and consistent investment on the
Internet by many advertisers is dependent upon validation that the Internet is
an effective advertising medium, which validation has not yet occurred and which
is essential to the achievement of steady and predictable advertising revenues.
Dependence on Third Party Relationships. The Company is dependent on a
---------------------------------------
number of third party relationships to create traffic on the Company's Websites
and consequently generate revenues. These relationships include arrangements
relating to the positioning of the Company's products and services on Web
browsers such as those offered by Netscape and Microsoft Corporation
("Microsoft"), and on other sites through license
-4-
<PAGE>
agreements in which Internet sites are linked to or otherwise utilize the
Company's services. In March 1997, the Company renewed its one-year "Premier
Provider" Agreement with Netscape (the "Netscape Agreement") pursuant to which
the Company is designated one of four "Premier Providers" of search and
navigation services accessible from the "Net Search" button on the Netscape
browser through April 30, 1998. Under the terms of the Netscape Agreement,
subject to adjustments under certain circumstances, the Company is obligated to
make minimum installment payments totaling $4.7 million over the term of the
Agreement. For the quarter ended January 31, 1998, a material portion of the
traffic to the Company's Websites was derived through the Netscape browser.
Although the Company is currently in discussions with Netscape about renewing
the Agreement, there can be no assurance that the Company will be able to enter
into a new "Premier Provider" arrangement after the expiration of the current
one-year term on terms and conditions similar to those contained in the existing
agreement, if at all. A material change in such terms or a failure to renew the
Netscape Agreement could have a material adverse effect on the Company's
business, results of operations, and financial condition. Netscape has expressed
its intention to limit the number of companies that will be listed as "Premier
Providers" on its Web site, and there can be no assurance that the Company will
be selected as one of those companies. Furthermore, Netscape has recently
announced its intention to launch its own "portal" Web site, which will offer
services which are similar to those currently offered by the Company, which
services are expected to compete with the Company's services. Even if Netscape
elects to continue to feature one or more third party providers of navigation
services, it could select one of the Company's competitors as an exclusive
provider. If the Company were unable to renew its agreement with Netscape, if
Netscape were to offer a competitive Web "gateway" site, or if Netscape were to
enter into an exclusive arrangement with one of the Company's competitors, the
Company's Web sites would lose a material portion of its traffic, traffic on
competing services could substantially increase, or the Company's Web sites
could otherwise become less attractive to advertisers, which would have a
material adverse effect on the Company's business, results of operations and
financial condition. In addition, if any replacement agreements with Netscape
are on materially worse terms than those of the Company's current Agreement with
Netscape, there would be a material adverse effect on the Company's business,
results of operations, and financial condition. The failure to renew the
Netscape Agreement would result, at least in the short term, in a material
reduction in traffic to the Company's Web sites. This could, in turn, result in
advertisers on the Company's Web sites, including sponsors and partners,
terminating their contracts with the Company, as such contracts are typically of
short duration and terminable on relatively short notice, or reducing the number
of impressions purchased. Furthermore, the Company's contracts with advertisers
and sponsors generally guarantee a minimum number of page views, and a failure
to achieve the minimum page views could result in a reduction in payments to the
Company or compel the Company to provide "make good" impressions if such
minimums are not met. If the Company is unable to develop viable alternative
distribution channels to Netscape or is otherwise unable to offset a reduction
in traffic, advertising revenues would be materially adversely affected,
resulting in a material adverse affect on the Company's business, results of
operations, and financial condition.
The Company is dependent on Website operators that provide links to the
Company's Websites. The Company also licenses technology and related databases
from third parties for certain elements of the Company's properties, including
telephone directories, email, chat, street mapping and other similar services.
The Company believes that certain of its third party relationships are important
to its ability to attract traffic and advertisers. Any errors, failures or
delays experienced in connection with these third party technologies and
information services could alienate the Company's users and adversely affect the
Company's brand and its business. Although the Company views these relationships
as important direct and indirect factors in the generation of revenues, most of
the Company's arrangements do not include minimum commitments to use the
Company's services or to provide access or links to the Company's products or
services in the future, are not exclusive and generally have a term of only one
to three years. In addition, there can be no assurance that the Company's
partners regard their relationship with the Company as important to their own
respective businesses and operations, that they will not re-assess their
commitment to the Company's products or services at any time in the future, or
that they will not develop their own competitive products or services. There can
be no assurance that the Company's existing relationships will result in
sustained business partnerships, successful product or service offerings or the
generation of significant revenues for the Company. Failure of one or more of
the Company's partnering relationships to achieve or maintain market acceptance
or commercial success, or the termination of one or more successful partnering
relationships, could have a material adverse effect on the Company's business,
results of operations or financial condition. In addition, the termination of
the Company's position on a Web browser, or the grant to a competitor of an
exclusive arrangement with respect to positioning on a Web browser, would
significantly reduce traffic on the Company's Websites, which would have a
material adverse effect on the Company's business, results of operations and
financial condition.
Intense Competition. The market for Internet products and services is
-------------------
highly competitive. In addition, the market for Internet advertising is
intensely competitive. There are no substantial barriers to entry, and the
Company expects that competition will continue to intensify. Although the
Company believes that the diverse segments of the Internet market will provide
opportunities for more than one supplier of products and services similar to
those of the Company, it is possible that a single supplier may dominate one or
more market segments. The Company believes that the principal competitive
factors in this market are name recognition, distribution arrangements,
performance, ease of use, a variety of value-added services, functionality and
features, and quality of support. A number of companies offer competitive
products addressing certain of the Company's target markets. The primary
competitors of the Company's products and services are other Internet search,
directory and navigation services, including Digital Equipment Corporation's
Alta Vista, America Online's NetFind, Excite, Inc. (including WebCrawler),
HotBot, Infoseek Corporation and Yahoo! Corporation. In addition, the Company
competes with metasearch services that allow a user to search the databases of
several catalogs and directories simultaneously. The Company also competes
indirectly with database vendors that
-5-
<PAGE>
offer information search and retrieval capabilities with their core database
products. In the future, the Company may encounter competition from providers of
Web browser software and other Internet products and services, such as Microsoft
and Netscape, that incorporate search and retrieval features into their
offerings. Many of the Company's existing competitors, as well as a number of
potential new competitors, have significantly greater financial, technical and
marketing resources than the Company. There can be no assurance that the
Company's competitors will not develop Internet products and services that are
superior to those of the Company or that achieve greater market acceptance than
the Company's offerings. Moreover, a number of the Company's current advertising
customers and partners have established relationships with certain of the
Company's competitors, and future advertising customers and partners may
establish similar relationships. The Company competes with online services and
other Website operators as well as traditional offline media, such as print and
television, for a share of advertisers' total advertising budgets. There can be
no assurance that the Company will be able to compete successfully against its
current or future competitors or that competition will not have a material
adverse effect on the Company's business, results of operations and financial
condition.
Management of Growth; Need to Establish Infrastructure; Additional
------------------------------------------------------------------
Personnel. The rapid execution necessary for the Company to successfully offer
- ---------
its products and services and implement its business plan in a rapidly evolving
market requires an effective planning and management process. The Company's
rapid growth has placed, and is expected to continue to place, a significant
strain on the Company's managerial and operational resources. To manage its
growth, the Company must continue to implement and improve its operational and
financial systems and to expand, train and manage its employee base. Further,
the Company will be required to manage multiple relationships with various
customers and other third parties. There can be no assurance that the Company
has made adequate allowances for the costs and risks associated with this
expansion and transition, that the Company's systems, procedures or controls
will be adequate to support the Company's operations, or that the Company's
management will be able to achieve the rapid execution necessary to offer
successfully the Company's products and services and implement its business
plan. The Company's future operating results will also depend on its ability to
expand its advertising sales and business development organizations and expand
its support organization commensurate with the growth of its business. If the
Company is unable to manage growth effectively, the Company's business, results
of operations and financial condition could be materially adversely affected.
Risks Associated with International Expansion. International sales,
---------------------------------------------
primarily in the form of license agreements, accounted for less than 10% of the
Company's revenues for the fiscal year ended July 31, 1997 and the quarter ended
January 31, 1998. As part of its business strategy, the Company is seeking
opportunities to expand its products and services into international markets. In
this regard, in May 1997, the Company formed Lycos Bertelsmann GmbH & Co. KG in
conjunction with Bertelsmann AG to offer Lycos search services in Europe, in
February 1998 licensed its search technology to LG Internet to offer search
services in Korea and in March 1998 the Company formed Lycos Japan in
conjunction with Sumitomo Corp. and Internet Initiative Japan to offer Lycos
search services in Japan. The Company believes that such expansion is important
to the Company's ability to continue to grow and to market its products and
services. In marketing its products and services internationally, however, the
Company will face new competitors. In addition, the ability of the Company to
enter the international markets will be dependent upon the Company's ability to
create localized versions of its products and services. There can be no
assurance that the Company will be successful in creating localized versions of
its products and services or marketing or distributing its products abroad or
that, if the Company is successful, its international revenues will be adequate
to offset the expense of establishing and maintaining international operations.
To date, the Company has limited experience in marketing and distributing its
products internationally. In addition to the uncertainty as to the Company's
ability to establish an international presence, there are certain difficulties
and risks inherent in doing business on an international level, such as
compliance with regulatory requirements and changes in those requirements,
export restrictions, export controls relating to technology, tariffs and other
trade barriers, protection of intellectual property rights, difficulties in
staffing and managing international operations, longer payment cycles, problems
in collecting accounts receivable, political instability, fluctuations in
currency exchange rates and potentially adverse tax consequences. There can be
no assurance that one or more of such factors will not have a material adverse
effect on any international operations established by the Company and,
consequently, on the Company's business, operating results and financial
condition.
Dependence on the Internet. The use of the Company's products and services
--------------------------
will depend in large part upon the development by others of an infrastructure
for providing Internet access and services. 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 certainty
whether the Internet will prove to be a viable commercial marketplace. The
Internet has experienced, and is expected to continue to experience, significant
growth in the number of users and amount of traffic. There can be no assurance
that the Internet infrastructure will continue to be able to support the demands
on it by this continued growth. In addition, the Internet could lose its
viability due to delays in the development or adoption of new standards and
protocols (for example, the next-generation Internet Protocol) to handle
increased levels of Internet activity. There can be no assurance that the
infrastructure or complementary services necessary to make the Internet a viable
commercial marketplace will be developed or, if developed, that the Internet
will become a viable commercial marketplace for products and services such as
those offered by the Company. In particular, the Internet is an unproven medium
for paid advertising sponsorship of services such as the Company's. If the
necessary infrastructure or complementary services or facilities are not
developed, or if the Internet does not become a viable commercial marketplace or
platform for advertising, the Company's business, results of operations and
financial condition will be materially adversely affected.
-6-
<PAGE>
Risk of Capacity Constraints and System Failure Relating to the Lycos
---------------------------------------------------------------------
Products and Services. A key element of the Company's strategy is to generate a
- ---------------------
high volume of traffic to its products and services, which the Company makes
available free of charge to users of the Internet. Accordingly, the performance
of the Company's products and services is critical to the Company's reputation,
its ability to attract advertisers to the Company's Websites and market
acceptance of these products and services. Any system failure that causes
interruptions in the availability or increases response time of the Company's
products and services could result in less traffic to the Company's Websites
and, if sustained or repeated, could reduce the attractiveness of the Company's
products and services to advertisers and partners. An increase in the volume of
searches conducted through the Company's products and services could strain the
capacity of the software or hardware deployed by the Company or the capacity of
the Company's network infrastructure, which could lead to slower response time
or system failures. Any failure to expand the capacity of the Company's hardware
or network infrastructure on a timely basis or on commercially reasonable terms
could have a material adverse effect on the Company's business, results of
operations and financial condition. In addition, as the number of Web pages and
users increases, there can be no assurance that the Company's products and
services will be able to scale proportionately.
The Company is dependent upon Web browsers and Internet and online service
providers for access to its products and services, and users have experienced
difficulties due to browser and provider system failures unrelated to the
Company's systems, products and services. The Company is also dependent on
hardware suppliers for prompt delivery, installation and service of servers and
other equipment and services used to provide its products and services.
Substantially all of the Company's hardware operations are located at its
computer facility located in Pittsburgh, Pennsylvania. There can be no assurance
that a system failure at this location would not adversely affect the
performance of the Company's products and services. This system is vulnerable to
damage from fire, floods, earthquakes, power loss, telecommunications failures,
break-ins and similar events. The Company does not presently have a
comprehensive disaster recovery plan. Despite the implementation of network
security measures by the Company, its servers are also vulnerable to computer
viruses, break-ins and similar disruptive problems. Computer viruses, break-ins
or other problems caused by third parties could lead to interruptions, delays or
cessation in service to users of the Company's products and services. The
occurrence of any of these risks could have a material adverse effect on the
Company's business, results of operations and financial condition.
Technological Change and New Products. The market for Internet products and
-------------------------------------
services is characterized by rapidly changing technology, evolving industry
standards and customer demands, and frequent new product introductions and
enhancements. These market characteristics are exacerbated by the emerging
nature of this market and the fact that many companies are expected to introduce
new Internet products in the near future. The Company's future success will
depend in significant part on its ability to continually improve the
performance, features and reliability of the Lycos Catalog in response to both
evolving demands of the marketplace and competitive product offerings, and there
can be no assurance that the Company will be successful in doing so. In
addition, a key element of the Company's business strategy is the development,
introduction and integration of new products that capitalize on the increasing
use of the Internet. There can be no assurance that the Company will be
successful in developing or integrating such products or services or that such
products and services will meet with market acceptance. In addition, new product
releases by the Company may contain undetected errors that require significant
design modifications, resulting in a loss of customer confidence and viewer
support, which will adversely affect the use of the Company's products and
services and, consequently, the Company's business, results of operations and
financial condition.
Protection of Proprietary Technology. The Company relies upon copyright
------------------------------------
law, trade secret protection and confidentiality agreements with its employees,
customers and others to protect its proprietary technology. Effective trademark,
copyright and trade secret protection may not be available in every foreign
country in which the Company's products are distributed. There can be no
assurance that the steps taken by the Company to protect its proprietary
technology will be adequate to prevent misappropriation of their technology by
third parties, or that third parties will not be able to independently develop
similar technology. In addition, there can be no assurance that other parties
will not assert technology infringement claims against the Company.
Government Regulation and Legal Uncertainties. The Company is not currently
---------------------------------------------
subject to direct regulation by any government agency, other than regulations
applicable to businesses generally, and there are currently few laws or
regulations directly applicable to access to or commerce on the Web. However,
due to the increasing popularity and use of the Web, it is possible that a
number of laws and regulations may be adopted with respect to the Web, covering
issues such as user privacy, pricing, characteristics and quality of products
and services. For example, the Company may be subject to the provisions of the
recently enacted Communications Decency Act (the "CDA"). Although the manner in
which the CDA will be interpreted and enforced and its effect on the Company's
operations cannot be determined, it is possible that the CDA could expose the
Company to substantial liability. The CDA could also dampen the growth in the
use of the Web generally and decrease the acceptance of the Web as a
communications and commercial medium, and could, thereby, have a material
adverse effect on the Company's business, results of operations and financial
condition. The adoption of any additional laws or regulations may decrease the
growth of the Web, which could in turn decrease the demand for the Company's
services and products or increase the Company's cost of doing business or
otherwise have an adverse effect on the Company's business, results of
operations or financial condition.
-7-
<PAGE>
Dependence on Key Personnel. The Company's performance is substantially
---------------------------
dependent on the performance of its executive officers and key employees, all of
whom have worked together for only a short period of time. The Company does not
have in place key person life insurance policies on any of its employees. The
loss of the services of any of its executive officers or other key employees
could have a material adverse effect on the business, results of operations or
financial condition of the Company. The Company is heavily dependent upon its
ability to attract, retain and motivate skilled technical and managerial
personnel. The Company's future success also depends on its continuing ability
to identify, hire, train and retain other highly qualified technical and
managerial personnel. Competition for such personnel is intense, and there can
be no assurance that the Company will be able to attract, hire, assimilate or
retain other highly qualified technical and managerial personnel in the future.
The inability to attract, hire, assimilate or retain the necessary technical and
managerial personnel could have a material adverse effect upon the Company's
business, results of operations or financial condition.
Liability for Information Retrieved from the Internet. Because material may
-----------------------------------------------------
be downloaded, by the online or Internet services operated or facilitated by the
Company or the Internet access providers with which the Company has
relationships, and be subsequently distributed to others, there is a potential
that claims will be made against the Company for defamation, negligence,
copyright or trademark infringement or other theories based on the nature and
content of such materials, including claims based on the Company providing
access to obscene, lascivious or indecent information. Although the Company
carries general liability insurance, the Company's insurance may not cover
potential claims of this type, or may not be adequate to indemnify the Company
for all liability that may be imposed. Any imposition of liability that is not
covered by insurance or is in excess of insurance coverage could have a material
adverse effect on the Company's business, results of operations or financial
condition.
Risks Associated with Potential Acquisitions. The Company has, and may in
--------------------------------------------
the future, pursue acquisitions of companies, technologies or assets that
complement the Company's business. For example, the Company recently acquired
Tripod, Inc. Acquisitions may result in the potentially dilutive issuance of
equity securities, the incurrence of additional debt, the write- off of in-
process research and development or software acquisition and development costs,
and the amortization of expenses related to goodwill and other intangible
assets, any of which could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flow. Acquisitions
would involve numerous additional risks, including difficulties in the
assimilation of the operations, services, products and personnel of the acquired
company, the diversion of management's attention from other business concerns
along with the risks involved in entering markets in which the Company has
little or no experience.
Year 2000 Compliance. The "Year 2000" issue concerns the potential
--------------------
exposures related to the automated generation of business and financial
misinformation resulting from the application of computer programs which have
been written using two digits, rather than four, to define the applicable year
of business transactions. The Company does not anticipate any significant
costs, problems or uncertainties associated with becoming Year 2000 complaint.
Failure of the Company or its software providers to adequately address the Year
2000 issue could result in misstatement of reported financial information or
otherwise adversely affect the Company's business operations.
Volatility of Stock Price. The price of the Company's Common Stock has
-------------------------
been and may continue to be subject to wide fluctuations in response to a number
of events and factors such as quarterly variations in results of operations,
announcements of new technological innovations or new products and media
properties by the Company or its competitors, changes in financial estimates and
recommendations by securities analysts, the operating and stock price
performance of other companies that investors may deem comparable to the
Company, and news relating to trends in the Company's markets. In addition, the
stock market in general, and the market prices for Internet-related companies in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of such companies. These broad market and industry
fluctuations may adversely affect the price of the Company's Common Stock,
regardless of the Company's operating performance.
-8-
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares. All proceeds from the sale of the Shares will be for the account of the
Selling Stockholders, as described below. See "Selling Stockholders" and "Plan
of Distribution" described below.
SELLING STOCKHOLDERS
The following table sets forth, as of the date of this Prospectus, the name
of each of the Selling Stockholders, the number of Shares that each such Selling
Stockholder owns as of such date, the number of Shares owned by each Selling
Stockholder that may be offered for sale from time to time by this Prospectus,
and the number of Shares to be held by each such Selling Stockholder assuming
the sale of all of the Shares offered hereby. Except as indicated, none of the
Selling Stockholders has held any position or office or had a material
relationship with the Company or any of its affiliates within the past three
years other than as a result of the ownership of the Company's Common Stock. The
Company may amend or supplement this Prospectus from time to time to update the
disclosure set forth herein.
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED(1)(2) SHARES WHICH OWNED AFTER
PRIOR TO OFFERING MAY BE SOLD OFFERING(1)(2)
------------ PURSUANT TO ------------
SELLING STOCKHOLDER NUMBER PERCENT THIS PROSPECTUS(2) NUMBER PERCENT
- ------------------- ------ ------- --------------- ------ -------
<S> <C> <C> <C> <C> <C>
Sage Enterprises, Inc.(3).................. 50,452 * 50,452 -- *
Bozell Worldwide, Inc...................... 5,095 * 5,095 -- *
</TABLE>
* Less than 1.0%.
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Each
person has sole voting and investment power with respect to the shares
shown as beneficially owned.
(2) Assumes that each Selling Stockholder will sell all of the Shares set forth
above under "Shares Which May Be Sold Pursuant to This Prospectus". There
can be no assurance that the Selling Stockholders will sell all or any of
the Shares offered hereunder.
(3) In connection with the issuance of the Shares to Sage, the Company and Sage
entered into an agreement pursuant to which, among other things, the
Company agreed to integrate certain of Sage's services into the Company's
Web services, to perform certain advertising sales services on behalf of
Sage and to promote Sage's services on the Company's Web sites. The
Company is entitled to retain a percentage of the net revenues attributable
to advertising placed on Web pages that include Sage's services. The
agreement has an initial term of three years and, thereafter, renews for
successive one-year periods unless either party elects to terminate the
agreement prior to the expiration of any renewal period. The Company owns
approximately 14.8% of the outstanding Common Stock (on an as-converted
basis) of Sage. CMG Information Services, Inc. ("CMGI") and certain
affiliated investment funds own in the aggregate approximately 37.2% of the
outstanding Common Stock of the Company and such investment funds own
approximately 31.2% of the outstanding Common Stock (on an as-converted
basis) of Sage and have representatives on the Boards of Directors of the
Company and Sage.
-9-
<PAGE>
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus may be offered and sold from time to
time by the Selling Stockholders. The Selling Stockholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Stockholders may sell the Shares being
offered hereby on the Nasdaq National Market, or otherwise, at prices and under
terms then prevailing or at prices related to the then current market price or
at negotiated prices. The Shares may be sold by one or more of the following
means of distribution: (a) a block trade in which the broker-dealer so engaged
will attempt to sell Shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a broker-
dealer as principal and resale by such broker-dealer for its own account
pursuant to this Prospectus; (c) an over-the-counter distribution in accordance
with the rules of the Nasdaq National Market; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (e)
in privately negotiated transactions. To the extent required, this Prospectus
may be amended and supplemented from time to time to describe a specific plan of
distribution. In connection with distributions of the Shares or otherwise, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions, broker-
dealers or other financial institutions may engage in short sales of the
Company's Common Stock in the course of hedging the positions they assume with
Selling Stockholders. The Selling Stockholders may also sell the Company's
Common Stock short and redeliver the Shares to close out such short positions.
The Selling Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of Shares offered hereby,
which Shares such broker-dealer or other financial institution may resell
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Stockholders may also pledge Shares to a broker-dealer
or other financial institution, and, upon a default, such broker-dealer or other
financial institution, may effect sales of the pledged Shares pursuant to this
Prospectus (as supplemented or amended to reflect such transaction). In
addition, any Shares that qualify for sale pursuant to Rule 144 may be sold
under Rule 144 rather than pursuant to this Prospectus.
In effecting sales, brokers, dealers or agents engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
Selling Stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commissions, discounts or concessions may be deemed to be
underwriting discounts or commissions under the Securities Act. The Company will
pay all expenses incident to the offering and sale of the Shares to the public
other than any commissions and discounts of underwriters, dealers or agents and
any transfer taxes.
In order to comply with the securities laws of certain states, if
applicable, the Shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Company has advised the Selling Stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of Shares in the
market and to the activities of the Selling Stockholders and their affiliates.
In addition, the Company will make copies of this Prospectus available to the
Selling Stockholders and has informed them of the need for delivery of copies of
this Prospectus to purchasers at or prior to the time of any sale of the Shares
offered hereby. The Selling Stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of Shares is made, if required, a Prospectus
Supplement will be distributed that will set forth the number of Shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public. There can be no assurance that the Selling Stockholders
will sell all or any of the Shares.
The Company has agreed with certain of the Selling Stockholders to keep the
Registration Statement of which this Prospectus constitutes a part effective for
up to one year following the effectiveness of the Registration Statement. The
Company intends to de-register any of the Shares not sold by the Selling
Stockholders at the end of such one year period; however, it is anticipated that
at such time any unsold shares may be freely tradeable subject to compliance
with Rule 144 of the Securities Act.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon by Hutchins,
Wheeler & Dittmar, A Professional Corporation, Boston, Massachusetts, counsel to
the Company.
EXPERTS
The consolidated financial statements of Lycos, Inc. at July 31, 1997 and
1996 and for each of the years in the two year period ended July 31, 1997 and
for the period from inception (June 1, 1995) to July 31, 1995, incorporated in
this Prospectus by reference to the Company's Annual Report on Form 10-K for the
year ended July 31, 1997, and the financial statements of Tripod, Inc. at
October 31, 1997 and December 31, 1996 and for the ten months ended October 31,
1997 and the year ended December 31, 1996, incorporated in this Prospectus by
reference to the Company's Current Report on Form 8-K/A dated March 10, 1998,
have been audited by KPMG Peat Marwick LLP, independent auditors, as set forth
in their reports thereon included therein, and are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
-10-
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE BY THIS PROSPECTUS
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT 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 SELLING STOCKHOLDER
OR BY ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SHARES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE OF OR OFFER TO SELL THE SHARES 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 Documents By Reference........................... 2
The Company............................................................... 3
Risk Factors.............................................................. 3
Use of Proceeds........................................................... 9
Selling Stockholders...................................................... 9
Plan of Distribution...................................................... 10
Legal Matters............................................................. 10
Experts................................................................... 10
</TABLE>
LYCOS, INC.
55,547 SHARES
OF
COMMON STOCK
PROSPECTUS
______________, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company will pay all expenses incident to the offering and sale to the
public of the shares being registered other than any commissions and discounts
of underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the amounts shown are estimates except the
Securities and Exchange Commission ("SEC") registration fee.
<TABLE>
<S> <C>
SEC registration fee........................... $ 1,158
NASDAQ National Market listing fee............. 2,000
Legal fees and expenses........................ 5,000
Accounting fees and expenses................... 2,500
Miscellaneous expenses......................... 342
-------
Total.......................................... $11,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by Section 145 of the Delaware General Corporation Law, the
Registrant's Amended and Restated Certificate of Incorporation, as amended,
includes a provision that eliminates the personal liability of its directors for
monetary damages for breach or alleged breach of their duty of care. In
addition, the Delaware General Corporation Law and the Company's Amended and
Restated 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 has no reasonable choice to believe were
unlawful.
The Company has purchased insurance with respect to, among other things,
the liabilities that may arise under the provisions referred to above. The
directors and officers of the Company also are insured against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, as amended, which might be incurred by them in such capacities and against
which they are not indemnified by the Company.
The Company has entered into separate indemnification agreements with its
directors and officers. The indemnification agreements create certain
indemnification obligations of the Company in favor of the directors and
officers and, as permitted by applicable law, will clarify and expand the
circumstances under which a director or officer will be indemnified.
ITEM 16. EXHIBITS
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation.
23.1 Consent of KPMG Peat Marwick LLP, Independent Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-3).
ITEM 17. UNDERTAKINGS
A. UNDERTAKING PURSUANT TO RULE 415
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)
Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change in the
Registration Statement;
II-1
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of this offering.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS
BY REFERENCE
The undersigned Registrant 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 at that time shall be deemed to be the initial bona
fide offering thereof.
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
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
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.
D. UNDERTAKING PURSUANT TO RULE 430A
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of the prospectus
filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a
form of prospectus 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.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Waltham, Commonwealth of Massachusetts, on this
16th day of April 1998.
- ----
LYCOS, INC.
By: /s/ Robert J. Davis
-------------------------------------
Robert J. Davis
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT each person whose signature appears
below constitutes and appoints Robert J. Davis and Edward M. Philip and each of
them, with the power to act without the other, as attorneys-in-fact, each with
the power of substitution, for him or her in any and all capacities, to sign any
amendment or post-effective amendment to this Registration Statement and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting to said attorneys-in-fact,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact or any of them, or their or his
substitute or substitutes, may lawfully 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 by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Robert J. Davis President, Chief Executive Officer and Director April 16, 1998
- ------------------------- (PRINCIPAL EXECUTIVE OFFICER) --
Robert J. Davis
/s/ Edward M. Philip Chief Operating Officer and Chief Financial Officer April 16, 1998
- ------------------------- (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER) --
Edward M. Philip
/s/John J. Connors, Jr. Director April 16, 1998
- ------------------------- --
John J. Connors, Jr.
/s/ Daniel Nova Director April 16, 1998
- ------------------------- --
Daniel Nova
/s/ David S. Wetherell Director April 16, 1998
- ------------------------- --
David S. Wetherell
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NUMBER -----------
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation
23.1 Consent of KPMG Peat Marwick LLP, Independent Accountants.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-3).
<PAGE>
EXHIBIT 5.1
APRIL 16, 1998
LYCOS, INC.
400-2 TOTTEN POND ROAD
WALTHAM, MA 02154
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 the date hereof (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of up to 55,547 shares of your Common Stock
(the "Shares"). All of the Shares are issued and outstanding and may be offered
for sale for the benefit of the selling stockholders named in the Registration
Statement. We understand that 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 your legal counsel, we have also examined the
proceedings taken by you in connection with the issuance of the Shares. We
assume that the consideration received by you in connection with each issuance
of Shares will include an amount in the form of cash, services rendered or
property that exceeds the greater of (i) the aggregate par value of such Shares
or (ii) the portion of such consideration determined by the Company's Board of
Directors to be "capital" for purposes of the Delaware General Corporation Law.
It is our opinion that the Shares are validly issued, fully paid and non-
assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
HUTCHINS, WHEELER & DITTMAR
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Lycos, Inc.:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Boston, Massachusetts
April 16, 1998
