<PAGE>
As filed with the Securities and Exchange Commission on August 13, 1998.
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------------
LYCOS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3277338
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
400-2 TOTTEN POND ROAD, WALTHAM, MASSACHUSETTS 02451
(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 02451
(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>
======================================================================================================
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered Per Share (1) Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share 2,092,622 $63.563 $133,013,333 $39,238.93
======================================================================================================
</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 August 11,
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 SUBJECT TO COMPLETION, DATED AUGUST 13, 1998
2,092,622 SHARES
LYCOS, INC.
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of up to 2,092,622 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 and warrantholders of the
Company or by donees, transferees or other successors in interest that receive
such shares as a gift, partnership distribution or other non-sale related
transfer (the "Selling Stockholders"). The Company will receive no part of the
proceeds of such sales. The Shares were originally issued or reserved for
issuance by the Company in connection with the Company's acquisition of
WhoWhere? Inc., a California corporation ("WhoWhere"), by and through a merger
of a wholly-owned subsidiary of Lycos, What Acquisition Corp. ("What"), with and
into WhoWhere (the "Acquisition"). The Shares were issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), provided by Regulation D thereunder. The Shares
are being registered by the Company pursuant to the Agreement and Plan of Merger
dated as of August 7, 1998 (the "Agreement") by and among Lycos, What, WhoWhere,
and certain shareholders of WhoWhere.
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 August 11, 1998, the last sale price of the Company's
Common Stock was $63.563 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 AUGUST ____, 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, January 31, 1998 and April 30, 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, March 24, 1998, May 1,
1998, May 15, 1998, June 30, 1998, August 11, 1998 and August 13, 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 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 02451 or by telephone at (781) 370-2700.
-2-
<PAGE>
THE COMPANY
Lycos, "Your Personal Internet Guide", is a "New Generation Online
Service" that offers a network of globally branded media properties and
aggregated content distributed primarily through the World Wide Web. Under the
"Lycos" brand, the Company provides guides to online content, aggregated third
party content, Web search and directory services and community and
personalization features. The Company seeks to draw a large number of viewers
to its Websites by providing a one-stop destination for identifying, selecting
and accessing resources, services, content and information on the Web. The
Company's acquisition of Tripod, Inc. ("Tripod") in February 1998 allows Lycos
to offer Internet users the ability to create personal homepages and join
interest-based communities within the Tripod Website.
On August 13, 1998, the Company acquired WhoWhere? Inc. ("WhoWhere") in
exchange for the issuance of approximately 1,885,127 shares of Common Stock and
the assumption of options and warrants to acquire approximately an additional
667,622 shares of Common Stock. WhoWhere offers a complete line of Web-based
applications, including its leading directory services, the MailCity e-mail
service with over 9.3 million registered users and angelfire.com, a leading Web
community with over 1.3 million members.
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 02451, 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 and nine months
ended April 30, 1998 generated revenues of $22.3 million and $37.0 million,
respectively. 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. These
risks include the Company's ability to continue to develop and extend the
"Lycos" brand; the Company's ability to maintain premier positions on high
traffic Web access points such as its arrangements with Netscape Communications
Corp. ("Netscape") and Microsoft Corporation ("Microsoft") or to enter into
additional distribution relationships and strategic alliances; the ability of
the Company to maintain and increase levels of traffic on its Websites; the
ability of the Company to continue to develop or acquire content, features and
functionality for its services; the development of equal or superior services or
products by competitors; the failure of the market to adopt the Web as an
advertising or commercial medium; the reduction in market prices for Web-based
advertising as a result of competition or otherwise; the Company's ability to
effectively generate commerce-related revenues through sponsored services and
placements in Lycos services; and the Company's success in attracting, retaining
and motivating qualified personnel. There can be no assurance that the Company
will be successful in addressing such risks. 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. The Company has incurred significant losses since
inception. Although the Company was profitable in the six months ended January
31, 1998, the Company reported a loss of $5.90 per share (a $0.15 loss per share
before amortization and one-time acquisition related charges) for the quarter
ended April 30, 1998 and there can be no assurance that the Company will sustain
revenue growth or return to profitability in the future. As of April 30, 1998,
the Company had an accumulated deficit of $102.9 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,
electronic commerce 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, maintain brand
identity and pursue 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 agreement with Netscape. Additionally, the
Company may incur costs pertaining to the introduction or enhancement of
services offered by the Company or the acquisition of businesses or
technologies. To the extent that such expenses
-3-
<PAGE>
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 and electronic
commerce, the addition or loss of advertisers or electronic commerce sponsors,
seasonal trends in advertising sales, the advertising budgeting cycles of
individual advertisers, capital expenditures and other costs relating to the
expansion of operations, incurrence of costs relating to acquisitions like
Tripod, WiseWire Corporation ("WiseWire"), GuestWorld Inc. ("GuestWorld") and
WhoWhere, 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
Websites and the Websites of its partners 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 analysts and
investors. In such event, the price of the Company's Common Stock would likely
be materially adversely affected.
Reliance on Advertising Revenues; Risks Related to Sponsorships. The
---------------------------------------------------------------
Company derives a significant portion of its revenues from the sale of
advertisements on its Web pages. For the nine months ended April 30, 1998,
advertising revenues represented approximately 75% 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's ability to increase its 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 through" 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.
The Company has entered into sponsorship arrangements with third parties to
provide sponsored services and placements on the Company's Websites in addition
to traditional banner advertising. In connection with these arrangements, the
Company may receive sponsorship fees as well as a portion of transaction
revenues received by such third party sponsors from users originated through the
Company's Websites, in return for minimum levels of user impressions or "click
through" to be provided by the Company. To the extent implemented, these
arrangements expose the Company to potentially significant financial risks,
including the risk that the Company fails to deliver required minimum levels of
user impressions or click through (in which case, these agreements typically
provide for adjustments to the fees payable thereunder or "make good" periods)
and that third party sponsors do not renew the agreements at the end of their
terms. Certain of these arrangements also require the Company to integrate
sponsors' content with the Company's services, which requires the dedication of
resources and significant programming and design efforts to accomplish. There
can be no assurance that the Company will be able to attract additional sponsors
or that it will be able to renew existing sponsorship arrangements when they
expire. In addition, the Company has granted exclusivity provisions to certain
of its sponsors, and may in the future grant additional exclusivity provisions.
Such exclusivity provisions may have the effect of preventing the Company, for
the duration of such exclusivity arrangements, from accepting advertising or
sponsorship arrangements within a particular subject matter in the Company's
Websites or across the Company's entire service. The inability of the Company
to enter into further sponsorship or advertising arrangements as a result of its
exclusivity arrangements could have a material adverse effect on the Company's
business, results of operations and financial condition.
The Internet as a commercial endeavor has been in existence for a short
period of time. The costs of establishing a Website are low, and new online
service providers, content providers and advertisers are being launched
regularly. Many of these companies are
-4-
<PAGE>
funded with venture capital and other forms of financing before they have proven
both that their particular industry segment and their business strategy will be
successful. Those companies that are unable to prove themselves successful
before their initial funding is depleted may find it difficult or impossible to
secure additional funding. The failure of any of the Company's advertisers or
electronic commerce sponsors to pay amounts due to the Company on a timely basis
could have a material adverse effect on the Company's business, results of
operations and financial condition.
Dependence on Netscape, Microsoft and Other Third Party Relationships. The
---------------------------------------------------------------------
Company is dependent on a number of third party relationships, including its
relationships with Netscape and Microsoft, 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, and on other
sites through license agreements in which Internet sites are linked to or
otherwise utilize the Company's services. For the nine months ended April 30,
1998, a material portion of the traffic to the Company's Websites was derived
through the Netscape browser. On May 19, 1998, the Company renewed its one-year
"Premier Provider" Agreement with Netscape (the "Netscape Agreement") pursuant
to which the Company is designated as a "Premier Provider" of search and
navigation services accessible from the "Net Search" button on the Netscape
browser through May 31, 1999. Under the terms of the Netscape Agreement,
Netscape will commit 15% of its search exposures during the one-year term of the
Netscape Agreement to the Company's search services in exchange for a minimum
guaranteed payment by the Company of $4.75 million, which payment is subject to
increase if the actual number of exposures delivered to the Company by Netscape
exceeds certain specified amounts. Because Netscape provides only exposures
from its Net Search page (as compared to a number of users who "click through"
to the Company's Websites), there can be no assurance that the Netscape
Agreement will provide the Company's Websites with material amounts of traffic.
Netscape has recently announced a two year agreement with Excite, Inc. in which
Netscape will commit an aggregate of 50% of its search exposures during the
first year of the agreement to Excite's search services and Netscape's own
branded search service (which will be powered by Excite) and Netscape will
commit an aggregate of 75% of its search exposures during the second year of the
agreement to Netscape's branded search service and Excite's search services.
This agreement will limit the number of search exposures which Netscape may make
available to other providers of search services, including the Company, in the
future. Although the Netscape Agreement may only be terminated under certain
limited circumstances, if the Company were unable to continue as a "Premier
Provider," the Company's Websites could lose a material portion of their
traffic, traffic on competing services could substantially increase, and the
Company's Websites 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. A traffic reduction could, in turn, result
in advertisers on the Company's Websites, 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 maintain its relationships
with third parties to create traffic on the Company's Websites 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 also dependent on Website operators that provide links to
the Company's Websites and, for certain elements of the Company's properties,
the Company licenses technology and related databases from third parties,
including telephone directories, e-mail, 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 reassess
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 and 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 and
electronic commerce arrangements is intensely competitive 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
-5-
<PAGE>
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 companies providing online services, including
America Online (including CompuServe), Digital Equipment Corporation's Alta
Vista, Excite, Inc. (including WebCrawler), Infoseek Corporation, Prodigy
Services, Inc. and Yahoo! Inc. In addition, a number of companies offering
Internet products and services, including direct competitors of the Company,
recently have begun to integrate multiple features within the products and
services they offer to consumers. Integration of Internet products and services
is occurring through development of competing products and through acquisitions
of, or entering into joint ventures and/or licensing arrangements involving,
competitors of the Company. For example, the Web browsers offered by Netscape
and Microsoft, which are the two most widely-used browsers and substantial
sources of traffic for the Company, may incorporate and promote information
search and retrieval capabilities in future releases or upgrades that could make
it more difficult for Internet viewers to find and use the Company's products
and services. Microsoft recently licensed products and services from Inktomi
Corporation ("Inktomi"), a direct competitor of the Company, and has announced
that it will feature and promote Inktomi services in the Microsoft Network and
other Microsoft online properties. The Company expects that such search services
may be tightly integrated into the Microsoft operating system, the Internet
Explorer browser, and other software applications, and that Microsoft will
promote such services within the Microsoft Network or through other Microsoft-
affiliated end-user services such as MSNBC or WebTV Networks, Inc. In addition,
Microsoft and Netscape have announced an intention to introduce Websites
offering services which are similar to those currently offered by the Company in
combination with Internet navigation features. Specifically, Microsoft has
introduced its own Internet search and navigation product offering under the
name "Start". Furthermore, Netscape has recently announced its intention to
launch its own "portal" Website, which will offer services similar to those
currently offered by the Company and which is expected to compete with the
Company's services. In addition, many large media companies have announced that
they are contemplating developing Internet navigation services and are
attempting to become "gateway" sites for Web users. In the event these companies
develop such "portal" sites, the Company could lose a substantial portion of its
user traffic, which would have a material adverse effect on the Company's
business, results of operations and financial condition. Further, entities that
sponsor or maintain high-traffic Websites or that provide an initial point of
entry for Internet viewers, such as the Regional Bell Operating Companies or
Internet Service Providers ("ISPs") such as Microsoft and America Online, Inc.,
currently offer and can be expected to consider further development, acquisition
or licensing of Internet search and navigation functions competitive with those
offered by the Company, or could take actions that make it more difficult for
viewers to find and use the Company's products and services. Consolidations,
integration and strategic relationships involving competitors of the Company
could have a material adverse effect on the Company's business, results of
operations and financial condition.
The Company also 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 offer information
search and retrieval capabilities with their core database products. Tripod and
Angelfire compete with other community-based Websites, including GeoCities,
Inc. In the future, the Company may encounter competition from providers of Web
browser software and other Internet products and services 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
offer 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 off-line 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.
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 and distribution, 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
and commerce markets' the successful implementation of the Company's advertising
program and the Company's ability to establish electronic commerce and licensing
relationships and other strategic alliances. There can be no assurance,
however, that the Internet advertising or commerce 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
and electronic commerce) 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 commercial use of the
Internet does
-6-
<PAGE>
not grow, if the Internet does not develop as an attractive medium for
advertising or electronic commerce, or if the Internet infrastructure does not
effectively support growth that may occur, the Company's business, results of
operations and financial condition would likely 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 would likely 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. 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's brand could
be diluted, thereby decreasing the attractiveness of its audiences to
advertisers.
Risks Associated with Potential Acquisitions and Investments. The Company
------------------------------------------------------------
has completed, and may in the future pursue, acquisitions of companies,
technologies or assets that complement the Company's business, such as the
Tripod, WiseWire, GuestWorld and WhoWhere acquisitions. There can be no
assurance that the Company will be able to identify additional suitable
acquisition candidates available for sale at reasonable prices, consummate any
acquisition or successfully integrate any acquired business (including Tripod,
WiseWire, GuestWorld and WhoWhere) into the Company's operations. 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, results of operations
and financial condition. For example, for the quarter ended April 30, 1998, the
Company recorded an in-process research and development expense of approximately
$87.6 million and goodwill and other intangible assets of approximately $11.0
million in connection with the acquisitions of Tripod and WiseWire.
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. Problems with an acquired business could have a
material adverse effect on the performance of the Company. The Company has
made, and may in the future make, investments in companies involved in the
development of technologies or services that are complementary or related to the
Company's operations. The Company has also made investments in GlobeComm, Inc.
(iName) and Sage Enterprises, Inc. (PlanetAll). These companies are in an early
stage of development and may be expected to incur substantial losses. There can
be no assurance that any investments in such companies will result in any
return, nor can there be any assurance as to the timing of any such return, or
that the Company will not suffer the loss of its entire investment.
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 many factors,
including 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 from licensing the Company's products and services, accounted for less
than 10% of the Company's revenues for the fiscal year ended July 31, 1997 and
the nine months ended April 30, 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 January 1998, the Company licensed its search
technology to LG Internet to offer search services in Korea; and in March 1998,
the Company entered into a joint venture with Sumitomo Corp. and Internet
Initiative Japan, Inc. ("IIJ") to offer search services in Japan. The Company
believes that this expansion is important to the Company's
-7-
<PAGE>
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
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, 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, results of operations 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 may not prove to be a viable commercial marketplace for a number of
reasons, including lack of acceptable security technologies, potentially
inadequate development of the necessary infrastructure, such as a reliable
network backbone, or timely development and commercialization of performance
improvements, including high speed modems. In addition, to the extent that the
Internet continues to experience significant growth in the number of users and
level of use, there can be no assurance that the Internet infrastructure will
continue to be able to support the demands placed upon it by such potential
growth or that the performance or reliability of the Web will not be adversely
affected by this continued growth. In addition, the Internet could lose its
commercial 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 has only
recently become a medium for advertising and electronic commerce. 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 and electronic commerce, the Company's business,
results of operations and financial condition will be materially adversely
affected.
Risk of Capacity Constraints and System Failure; Advertising Management
-----------------------------------------------------------------------
System. 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 the 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. The Company also
outsources a portion of its hardware operations to third parties. There can be
no assurance that a system failure at any of these locations 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.
-8-
<PAGE>
The process of managing advertising within large, high traffic Websites
such as the Company's is an increasingly important and complex task. The
Company licenses from a third party an advertising management system. To the
extent that the Company encounters system failures or material difficulties in
the operation of this system, the Company could be unable to deliver banner
advertisements and sponsorships through its Websites. Any extended failure of,
or material difficulties encountered in connection with, the Company's
advertising management system may expose the Company to "make good" obligations
with its advertising customers, which, by displacing advertising inventory,
among other consequences, would reduce revenue and would 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 search and navigation
services 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 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
Company's products and services and, consequently, 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.
Intellectual Property and Proprietary Rights. The Company's success
--------------------------------------------
depends significantly upon its proprietary technology. The Company currently
relies on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect its proprietary
rights. The Company generally enters into confidentiality agreements with its
employees and with its consultants and partners. The Company has registered and
applied for registration of certain service marks and trademarks, and will
continue to evaluate the registration of additional service marks and
trademarks, as appropriate. In addition, Carnegie Mellon University ("CMU") has
been issued a patent in the United States relating to Lycos' search and indexing
technology, which has been licensed to the Company on a perpetual basis. There
can be no assurance that such patent will not be challenged, and if such
challenges are brought, that the patent will not be invalidated. There also can
be no assurance that the Company will develop proprietary products or
technologies that are patentable, that any issued patent will provide the
Company with any competitive advantages or will not be challenged by third
parties, or that the patents of others will not have a material adverse effect
on the Company's ability to do business. Despite the Company's efforts to
protect its proprietary rights, unauthorized parties may attempt to copy aspects
of the Company's products or services or to obtain and use information that the
Company regards as proprietary. The laws of some foreign countries do not
protect proprietary rights to as great an extent as do the laws of the United
States and the Company does not currently have any patents or patent
applications pending in any foreign country. There can be no assurance that the
Company's means of protecting its proprietary rights will be adequate or that
the Company's competitors will not independently develop similar technology or
duplicate the Company's products or design around patents issued to the Company
or other intellectual property rights of the Company.
There have been substantial amounts of litigation in the computer industry
regarding intellectual property rights. There can be no assurance that third
parties will not in the future claim infringement by the Company with respect to
current or future products, trademarks or other proprietary fights, that the
Company will counterclaim against any such parties in such actions or that if
the Company makes claims against third parties with respect thereto, that any
such party will not counterclaim against the Company in such actions. Any such
claims or counterclaims could be time-consuming, result in costly litigation,
diversion of management's attention, cause product release delays, require the
Company to redesign its products or require the Company to enter into royalty or
licensing agreements, any of which could have a material adverse effect upon the
Company's business, results of operations and financial condition. Such royalty
or licensing agreements, if required, may not be available on tennis acceptable
to the Company, or at all.
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
-9-
<PAGE>
and products or increase the Company's cost of doing business or otherwise have
a material adverse effect on the Company's business, results of operations or
financial condition.
Due to the global nature of the Web, it is possible that, although
transmission of the Company's services originate from its operations centers in
New Jersey and Pennsylvania, the governments of other states and foreign
countries might attempt to regulate the Company's transmissions or prosecute the
Company for violations of their laws. There can be no assurance that violations
of local laws will not be alleged or charged by state or foreign governments,
that the Company might not unintentionally violate such law or that such laws
will not be modified, or new laws enacted, in the future. It is also possible
that states or foreign countries may seek to impose sales taxes on out of state
companies that engage in commerce over the Internet. In the event that states
or foreign countries succeed in imposing sales or other taxes on Internet
commerce, the growth of the use of the Internet for commerce could slow
substantially. Any of the foregoing developments could have a material adverse
effect on the Company's business, results of operations or financial condition.
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, it is possible that
claims will be made against the Company on the basis of 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.
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 compliant.
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.
-10-
<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 (other than a non-officer
employment relationship) 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 SHARES WHICH BENEFICIALLY
OWNED (1)(2) MAY BE SOLD OWNED AFTER
PRIOR TO OFFERING PURSUANT TO OFFERING(1)(2)(3)
SELLING STOCKHOLDER NUMBER PERCENT THIS PROSPECTUS NUMBER PERCENT
- ------------------------------------------------ ------------ ------- --------------- ----------------- -------
<S> <C> <C> <C> <C> <C>
Lighthouse Capital Partners II, L.P. 3,808 * 3,808 -- --
Silicon Valley Bank 1,797 * 1,797 -- --
Phoenix Leasing Incorporated 4,492 * 4,492 -- --
Imperial Bank 3,369 * 3,369 -- --
Venrock Associates 334,399 1.6 334,399 -- --
Venrock Associates II, L.P. 243,125 1.1 243,125 -- --
Terence J. Garnett 62,482 * 62,482 -- --
Charter Ventures II, L.P. 56,587 * 56,587 -- --
William F. Miller 33,386 * 33,386 -- --
Richard Magnuson 10,361 * 10,361 -- --
VLG Investments 1996 (4) 4,812 * 4,812 -- --
Antenna Group LLC 1,891 * 1,891 -- --
Devine & Virnig, Inc. 1,125 * 1,125 -- --
Karr, Howard L. or Louise C., trustees or the
successor trustee(s) of the Karr Family 1982
Trust, dated 12/1/82 723 * 723 -- --
Joshua Pickus 1,304 * 1,304 -- --
Cynthia L. Karr 216 * 216 -- --
Elizabeth A. Karr 216 * 216 -- --
Vantage Point Venture Partners 1996 (5) 378,113 1.8 378,113 -- --
FW WhoWhere Investors, L.P. 178,355 * 178,355 -- --
Garnett, Terence J. and Katrina A. Garnett,
Trustees of the Garnett Family Trust UDT 10,344 * 10,344 -- --
Henri Jarrat 3,566 * 3,566 -- --
Christopher L. Kaufman Trust (S.P.) dated
April 12, 1988 421 * 421 -- --
Jason Strober 356 * 356 -- --
Prabhat Agarwal 189,770 * 189,770 -- --
Ashutosh Roy 189,770 * 189,770 -- --
Gunjan Sinha 191,464 * 189,770 1,694 *
Dale Fuller 101,661 * 66,927 34,734 *
Priyaranjan Sinha 36,771 * 36,771 -- --
Rupesh Kapoor 19,721 * 14,402 5,319 *
NBC Multimedia, Inc. 10,589 * 10,589 -- --
Steve Westly 7,743 * 7,743 -- --
Alan Salzman 6,777 * 6,777 -- --
Edward M. Shelton 17,202 * 5,422 11,780 *
Michael F. Armistead 19,180 * 4,179 15,001 *
Eric Smit 4,150 * 3,162 988 *
Peter W. Clark 7,981 * 2,470 5,511 *
Sean Michael White 7,437 * 2,270 5,167 *
Ellen Levy 6,326 * 2,044 4,282 *
Murali V. Srinivasan 988 * 988 -- --
Peter Gilbert 1,765 * 576 1,189 *
Darawan Chiayapathna 1,651 * 548 1,103 *
Grace Benveniste 938 * 474 464 *
Lisa Custalow 1,397 * 406 991 *
Richard Rock 367 * 367 -- --
Sanjay Agarwal 355 * 355 -- --
Vipin Gupta 338 * 338 -- --
Dirk Kincannon 678 * 338 340 *
Tracy Hoyt 2,439 * 2,439 -- --
Laura Lindsey 123 * 67 56 *
Jenny Schmidt 635 * 257 378 *
Ruth-Anne Siegel 592 * 423 169 *
Vasudeva Chinna 282 * 282 -- --
Marc Majcher 135 * 135 -- --
James Hirshfield 2,293 * 1,684 609 *
Jerry Cecco 68 * 68 -- --
Broadview International LLC 15,157 * 15,157 -- --
VLG Investments 1998 (6) 406 * 406 -- --
</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. Under
such rule, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within 60 days of the
date of this Prospectus through the exercise of any stock option or other
right. Unless otherwise indicated in the footnotes, each person has sole
voting and investment power (or shares such powers with his or her spouse)
with respect to the shares shown as beneficially owned.
(2) Includes an aggregate of 188,519 shares of Common Stock beneficially
owned by the Selling Stockholders that have been deposited in escrow
pursuant to the Merger Agreement to secure the respective indemnification
obligations of the Selling Stockholders thereunder (the "Escrowed Shares").
The Escrowed Shares will be released from escrow on August 13, 1999 only
to the extent that no claims have been made against the Escrowed Shares.
The Escrowed Shares may not be sold by the Selling Stockholders prior to
August 13, 1999, except as otherwise provided in the Escrow Agreement.
(3) 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.
(4) Subsequent to the date of this Prospectus, the shares held by VLG
Investments 1996 may be distributed to Elias J. Blawie, James L. Brock,
Cathryn S. Chinn, Michael W. Hall, Craig W. Johnson, Mark A. Medearis, Tae
Hea Nahm, Jon C. Richards, Mark B. Weeks, Renee R. Deming, Donald M. Keller
Jr., Joshus Pickus, Mark Windfeld-Hansen, Peter Cohn, William W. Ericson,
Joshua L. Green, Patrick G. Reutens, Jeffrey Y. Suto, John V. Bautista,
Sonya F. Erickson, Jon E. Gavenman, Edmund S. Ruffin, Mark L. Silverman,
Glen Van Ligten and Robert V. Zipp.
(5) Subsequent to the date of this Prospectus, the shares of Vantage Point
Venture Partners 1996 may be distributed to AJ Trusts Partnership, Chase
Manhattan Bank, as trustee of the AMOCO Corporation Master Trust for
Employee Pension Plans, A. Gary Anderson Family Foundation, Barels Family
Trust, William James Bell 1993 Trust, John W. Buoymaster, Norman Braman,
Dennis M. Brown, Campodonico Brothers Partnership I, COFCO Capital Corp.,
Comdisco, Inc., Crosspoint Associates 1996, Cypress VI Partners, Joseph F.
Dox & Connie J. Dox, TTEES, the Dox Family Trust U/A/D 6/12/90 as Amended,
Henry Druker, Bruce Carl Edwards and Susan Ellen Edwards Living Trust,
David W. Ehret, GBC Venture Capital, Inc., Gary E. Gigot, Eric J. Gleacher,
A. Nathaniel Goldhaber, Douglas E. Goldman Revocable Trust U/A 6/29/84,
John D. Goldman, Goldman-Valeriote Trust, Joseph Grundfest, Vinod Gupta
Revocable Trust, Herbert Partners, Laurence R. Hootnick, Jeremy Jaech,
Henri Jarrat, JMJ Trusts Partnership, Michael J. John, Linda K. and
Theodore C. Johnson, Stuart M. and Barbara J. Johnson, Marc E. Jones, John
J. Katsaros, David L. Kirp 1994 Revocable Inter Vivos Trust, Kirschner
Family Revocable Trust, Harlan P. Kleiman, Scott and Joan Kriens, Erin J.
Lastinger QSST, Edward E. Luck, Irrevocable Trust for Debra Lyonnais,
Audrey MacLean and Michael M. Clair as trustees, or their successors of the
Audrey MacLean and Michael M. Clair Trust Agreement UAD 12/01/92, James D.
Marver, Ian O. Mausner, The Mendez 1992 Trust, Dated 10/14/92, NatWest
Markets Equity Corporation, Scott D. Oki, Onpac Partners, Charles G.
Phillips, Peter I. Pressman MD, Safi Qureshey Family Trust, W. Preston and
Belena Rae Raisin, Ward Raisin, Redwood Forrest Investments, LP, F. Grant
Saviers, Joseph M. Schell, William J. Schroeder and Marilee J. Schroeder
Trustees under Revocable Trust Agreement dated 11/01/93 as amended, FBO
William J. Schroeder and Marilee J. Schroeder, Daniel J. Schwinn, Bernard
Seiz, Leonard Shustek, Bankers Trust Company, as trustees of Southern
Company System Master Retirement Trust, A.J. Stein Family Partnership, D.R.
Stephens & Company, Subhedar Revocable Trust Dated 2/05/93, Irrevocable
Trust for D. Craig Valassis, Irrevocable Trust for Doug T. Valassis,
Valassis Enterprises LP, Roger O. Walther SP Trust, Tom Yuen Family Trust
Oct. 1984 and VantagePoint Associates LLC.
(6) Subsequent to the date of this Prospectus, the shares held by VLG
Investments 1998 may be distributed to Elias J. Blawie, James L. Brock,
Cathryn S. Chinn, Michael W. Hall, Craig W. Johnson, Mark A. Medearis, Tae
Hea Nahm, Jon C. Richards, Mark B. Weeks, Renee R. Deming, Donald M. Keller
Jr., Joshua Pickus, Mark Windfeld-Hansen, Peter Cohn, William W. Ericson,
Joshua L. Green, Patrick G. Reuteno, Jeffrey Y. Suto, John V. Bautista,
Sonya F. Erikson, Jon E. Gavenman, Edmund S. Ruffin, Mark L. Silverman,
Glen Van Ligten, Robert V. Zipp, Elizabeth Enayati, David Lee, Michael
Morriseey, Craig E. Sherman, Steve Tonsfeldt, Laura Gordon, Chris Hurley,
Kara Diane Palmer, Kate Rowan, Christine A. Tomomatsu and Heayoon J. Woo.
(7)
-11-
<PAGE>
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus may be offered and sold from time to
time by the Selling Stockholders, including donees, transferees, pledgees or
other successors in interest that receive such Shares as a gift, partnership
distribution or other non-sale related transfer. 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
until the first anniversary of the closing of the acquisition of WhoWhere.
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.
-12-
<PAGE>
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.
The balance sheets of WiseWire as of May 31, 1997 and 1996 and the
statements of operations, stockholders' equity and cash flows for the year ended
May 31, 1997 and for the period from June 9, 1995 (inception) through May 31,
1996, incorporated in this Prospectus by reference to the Company's Current
Report on Form 8-K/A dated May 15, 1998, have been audited by
PricewaterhouseCoopers LLP, independent public accountants, as stated in their
report thereon, which included an explanatory paragraph concerning WiseWire's
ability to continue as a going concern, and are incorporated herein by reference
in reliance upon such report given on the authority of that firm as experts in
accounting and auditing.
-13-
<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
PAGE
----
Available Information..................................................... 2
Incorporation of Certain Documents By Reference........................... 2
The Company............................................................... 3
Risk Factors.............................................................. 3
Use of Proceeds........................................................... 11
Selling Stockholders...................................................... 11
Plan of Distribution...................................................... 12
Legal Matters............................................................. 12
Experts................................................................... 13
LYCOS, INC.
2,092,622 SHARES
OF
COMMON STOCK
PROSPECTUS
AUGUST _____, 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.
SEC registration fee........................... $ 39,238.93
NASDAQ National Market listing fee............. $ 17,500
Legal fees and expenses........................ $ 10,000
Accounting fees and expenses................... $ 5,000
Miscellaneous expenses......................... $ 3,261.07
Total.......................................... $ 75,000
===========
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 PricewaterhouseCoopers LLP, Independent Accountants.
23.3 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 to such information 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 13th
day of August, 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.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Robert J. Davis President, Chief Executive Officer August 13, 1998
- ------------------------- and Director
Robert J. Davis (PRINCIPAL EXECUTIVE OFFICER)
/s/ Edward M. Philip Chief Operating Officer and Chief August 13, 1998
- ------------------------- Financial Officer
Edward M. Philip (PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
/s/John M. Connors, Jr. Director August 13, 1998
- -------------------------
John M. Connors, Jr.
/s/ Richard S. Sabot Director August 13, 1998
- -------------------------
Richard S. Sabot
/s/ Daniel J. Nova Director August 13, 1998
- -------------------------
Daniel J. Nova
/s/ David S. Wetherell Director August 13, 1998
- -------------------------
David S. Wetherell
II-3
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
-----------
5.1 Opinion of Hutchins, Wheeler & Dittmar, A Professional Corporation
23.1 Consent of KPMG Peat Marwick LLP, Independent Accountants.
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.3 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-3).
<PAGE>
EXHIBIT 5.1
AUGUST 13, 1998
LYCOS, INC.
400-2 Totten Pond Road, Waltham, MA 02451
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 2,092,622 shares of your Common
Stock, of which an aggegate of 1,900,344 shares are issued and outstanding (the
"Outstanding Shares"), and 192,278 shares are issuable upon the exercise of
warrants assumed by you (the "Warrant Shares"). We understand that the
Outstanding Shares and the Warrant 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 Outstanding
Shares. We assume that the consideration received by you in connection with each
issuance of Outstanding Shares and Warrant 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 (i) the Outstanding Shares are validly issued, fully
paid and non-assessable, and (ii) the Warrant Shares, when issued upon exercise
of the warrants, will be 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
INDEPENDENT ACCOUNTANTS' CONSENT
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.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
August 13, 1998
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANT
We consent to the incorporation by reference in this registration statement on
Form S-3 of our report, which includes an explanatory paragraph concerning
WiseWire Corporation's ability to continue as a going concern, dated July 31,
1997, except for the first paragraph of Note 5 as to which the date is October
13, 1997 and Note 12 as to which the date is September 24, 1997, on our audits
of the financial statements of WiseWire Corporation. We also consent to the
references to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
August 13, 1998
