<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_CONFIDENTIAL,]FOR USE OF THE
[X]Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CONNECT, INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CONNECT, INC.
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
CONNECT, INC.
-------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 15, 1998
A Special Meeting of Stockholders (the "Special Meeting") of CONNECT, Inc.,
a Delaware corporation (the "Company"), will be held at the principal
executive offices of the Company, located at 515 Ellis Street, Mountain View,
California, on January 15, 1998 at 9:00 a.m. local time, for the following
purposes:
1. To approve an amendment to the Company's Certificate of Incorporation to
effect a one-for-five reverse split of the Company's Common Stock;
2. To approve an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Company's Common Stock
from 40,000,000 to 60,000,000 shares; and
3. To transact such other business as may properly come before the Special
Meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying and made a part of this Notice.
The Board of Directors has fixed the close of business on December 10, 1997
as the record date for determining the stockholders entitled to notice of and
to vote at the Special Meeting and any adjournment(s) or postponement(s)
thereof.
All stockholders are cordially invited to attend the Special Meeting in
person. However, whether or not you expect to attend the Special Meeting in
person, you are urged to mark, date, sign and return the enclosed proxy card
as promptly as possible in the postage-prepaid envelope provided to ensure
your representation and the presence of a quorum at the Special Meeting. If
you send in your proxy card and then decide to attend the Special Meeting to
vote your shares in person, you may still do so. Your proxy is revocable in
accordance with the procedures set forth in the Proxy Statement.
By Order of the Board of Directors,
/s/ JOSEPH G. GIRATA
Joseph G. Girata
Secretary
Mountain View, California
December , 1997
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED
EXPENSE OF RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND
SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY.
<PAGE>
CONNECT, INC.
----------------
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
GENERAL
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of CONNECT, Inc., a Delaware corporation (the
"Company"), of proxies in the enclosed form for use in voting at the Special
Meeting of Stockholders (the "Special Meeting") to be held at the principal
executive offices of the Company, located at 515 Ellis Street, Mountain View,
California, on January 15, 1998 at 9:00 a.m., local time, and any adjournment
or postponement thereof.
This Proxy Statement and the enclosed proxy card were first mailed to
stockholders entitled to vote at the meeting on or about December 15, 1997.
The Company's principal executive offices are located at 515 Ellis Street,
Mountain View, California, 94043. The Company's telephone number at that
location is (650) 254-4000.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Joseph G. Girata) a written notice of revocation or a duly executed proxy
bearing a later date, or by attending the Special Meeting and voting in
person.
RECORD DATE; VOTING SECURITIES
The close of business on December 10, 1997 has been fixed as the record date
(the "Record Date") for determining the holders of shares of Common Stock of
the Company entitled to notice of and to vote at the Special Meeting. At the
close of business on the Record Date, the Company had approximately
shares of Common Stock outstanding and held of record by approximately
stockholders.
VOTING AND SOLICITATION
For purposes of this Special Meeting, each outstanding share of Common Stock
on the Record Date is entitled to one vote on all matters.
Votes cast by proxy or in person at the Special Meeting will be tabulated by
the Inspector of Elections (the "Inspector") with the assistance of the
Company's transfer agent. The Inspector will also determine whether or not a
quorum is present. Except in certain specific circumstances, the affirmative
vote of a majority of shares present in person or represented by proxy at a
duly held meeting at which a quorum is present is required under Delaware law
for approval of proposals presented to stockholders. In general, Delaware law
also provides that a quorum consists of a majority of the shares entitled to
vote and present in person or represented by proxy. The Inspector will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and as negative votes for purposes of
determining the approval of any matter submitted to the stockholders for a
vote. Any proxy which is returned using the form of proxy enclosed and which
is not marked as to a particular item will be voted for the amendment to the
Certificate of Incorporation effecting a reverse stock split, for the
amendment to the Certificate of Incorporation increasing the number of
authorized shares of Common Stock, and as the proxy holders deem advisable on
other matters that may come before the meeting, as the case may be with
respect to the item not marked. If a broker indicates on the enclosed proxy or
its substitute that it does not have discretionary authority as to certain
shares to vote on a particular matter ("broker non-votes"), those shares will
be considered as present for purposes of determining whether a quorum
1
<PAGE>
exists, but will not be considered entitled to vote with respect to that
matter. The Company believes that the tabulation procedures to be followed by
the Inspector are consistent with the general statutory requirements in
Delaware concerning voting of shares and determination of a quorum.
The solicitation of proxies will be conducted by mail and the Company will
bear all attendant costs. These costs will include the expense of preparing
and mailing proxy solicitation materials for the Special Meeting and
reimbursements paid to brokerage firms and others for their expenses incurred
in forwarding solicitation materials regarding the Special Meeting to
beneficial owners of the Company's Common Stock. The Company may conduct
further solicitation personally, telephonically or by facsimile through its
officers, directors and employees, none of whom will receive additional
compensation for assisting with the solicitation.
DESCRIPTION OF PRIVATE PLACEMENT OF CONVERTIBLE DEBT SECURITIES AND WARRANTS
In November 1997, the Company entered into several Private Placement
Purchase Agreements (collectively the "Private Placement") that initially
raised $10,000,000 through the issuance of units consisting of convertible
debt securities and warrants (the "Units"). Each Unit was sold for $40,000 and
consisted of a $40,000 principle amount convertible note (a "Convertible
Note") and a warrant (a "Warrant"). Each Convertible Note accrues interest at
a rate of 5% per annum and is convertible at the option of the holder into
shares of the Company's Common Stock at a price per share equal to the lesser
of (i) $2.00 or (ii) 80% of the average closing bid price of the Company's
Common Stock during the 10 trading days prior to conversion. Each Warrant is
exercisable at any time within three years after the date of issuance to
purchase 13,333 shares of the Company's Common Stock at a price of $2.50 per
share. The Company has reserved the right to issue up to an additional
$2,000,000 of Units (in excess of the $10,000,000 described above) within a
short period of time after closing the initial sale of units. The Company has
reserved 9,000,000 shares of its Common Stock for issuance upon the conversion
of the Convertible Notes, and 3,533,245 shares of Common Stock for issuance
upon exercise of the Warrants. Depending upon the Company's stock price at the
time of conversion of the Convertible Notes, more than 9,000,000 shares of
Common Stock may be required to enable all of the Convertible Notes to convert
into Common Stock. The purpose of the offering was to provide funds for
working capital and general corporate purposes.
In connection with the Private Placement, the Company agreed to seek
stockholder approval to effect a reverse stock split and increase the number
of shares of Common Stock authorized from 40,000,000 to 60,000,000. The
purpose of this commitment was to make available additional shares of Common
Stock for issuance upon conversion of the Convertible Notes. The Company
further agreed that if such stockholder approval were not received by January
31, 1998, and if there were insufficient shares of Common Stock available to
effect a conversion of the Convertible Notes, then holders of the Convertible
Notes would have the right to redeem that portion of their notes which was
unable to be converted due to the shortfall of available shares of Common
Stock. The redemption price is 135% of the principal amount converted, is
payable within 30 days of demand, and accrues interest at a rate no greater
than 11% per annum from the date of demand.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Quaestus Management Corporation, an entity with which Richard W. Weening, a
Director of the Company, is affiliated, purchased 2 Units in the Private
Placement. Mr. Weening disclaims beneficial ownership of the securities held
by Quaestus Management Corporation, except to the extent of his proportionate
interest therein.
BankAmerica Ventures and BankAmerica Venture Partners I, entities with which
Rory T. O'Driscoll, a Director of the Company, is affiliated, purchased 30
Units in the Private Placement. Mr. O'Driscoll disclaims beneficial ownership
of the securities held by BankAmerica Ventures and BankAmerica Venture
Partners I, except to the extent of his proportionate interest in those
entities.
2
<PAGE>
Norwest Equity Partners V, L.L.P., an entity with which Promod Haque, a
Director of the Company, is affiliated, purchased 31 Units in the Private
Placement. Mr. Haque disclaims beneficial ownership of the securities held by
Norwest Equity Partners V, L.L.P, except to the extent of his proportionate
interest therein.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 1998
Annual Meeting of Stockholders must be received by Joseph G. Girata, CONNECT,
Inc., 515 Ellis Street, Mountain View, California, 94043-2242, no later than
December 28, 1997.
PROPOSAL NO. 1
AMENDMENT TO CERTIFICATE OF INCORPORATION
EFFECTING A REVERSE COMMON STOCK SPLIT
The Board has approved an amendment to the Company's Certificate of
Incorporation to effect a reverse stock split, pursuant to which each five
shares of Common Stock of the Company will become one share of Common Stock
(the "Reverse Split"). The stockholders are being asked to approve this
proposed amendment. The Reverse Split will take effect, if at all, after it is
approved by the stockholders of the Company and after filing with the
Secretary of State of the State of Delaware (the "Effective Date"). Even if
the Reverse Split is approved by the stockholders it is within the discretion
of the Board of Directors to not carry out the Reverse Split.
The purpose of the Reverse Split is to facilitate the Private Placement
described above and to adjust the price of the Common Stock and the number of
outstanding shares to facilitate the acquisition of Common Stock by
institutional investors. In connection with the Private Placement, the Company
is obligated to seek stockholder approval for the Reverse Split. If such
approval is not obtained by January 31, 1998, holders of the Convertible Notes
will be allowed to redeem a portion of their notes at a redemption price of
135% of the principle amount plus accrued interest from the date of demand at
a rate not to exceed 11% per annum. The Reverse Split will not affect the
relative holdings of the Company's security holders.
As a result of the Reverse Split, the [19,144,660] shares of Common Stock
outstanding on December 10, 1997 will become approximately
shares of Common Stock and any other shares issued prior to the Effective Date
will be similarly adjusted. No fractional shares will be issued upon the
Reverse Split. In lieu thereof, the Company will pay each holder of a
fractional interest an amount in cash equal to the value of such fractional
interest on the Effective Date. There are currently 40,000,000 authorized
shares of Common Stock. Under Proposal Number 2 to this Proxy Statement, the
Company's stockholders are being asked to approve an amendment to the
Company's Certificate of Incorporation increasing the number of authorized
shares of the Company's Common Stock from 40,000,000 to 60,000,000 shares.
In addition, on the Effective Date each five options and warrants to
purchase Common Stock outstanding on the Effective Date will be adjusted so
that the number of shares of Common Stock purchasable thereunder shall be one
(and corresponding adjustments will be made to the number of shares vested
under each outstanding option) and the exercise price of each option and
warrant shall be multiplied by five. On the effective date, the outstanding
Convertible Notes shall be adjusted from a per share conversion price of the
lesser of (i) $2.00 or (ii) 80% of the average closing bid price of the
Company's Common Stock during the 10 trading days prior to conversion, to the
lesser of (i) $10.00 or (ii) 80% of the average closing bid price of the
Company's Common Stock during the 10 trading days prior to conversion. On the
Effective Date, the outstanding Warrants to purchase the Company's Common
Stock shall be adjusted so that the number of shares of Common Stock
purchasable upon exercise of such Warrants shall be reduced from 13,333 shares
to 2,667 shares and the exercise price of the warrant shall be increased from
$2.50 per share to $12.50 per share.
3
<PAGE>
APPROVAL REQUIRED
Approval of Proposal No. 1 requires the affirmative vote of a majority of
the outstanding shares of Common Stock of the Company.
RECOMMENDATION OF THE BOARD
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
CERTIFICATE OF INCORPORATION EFFECTING A REVERSE COMMON STOCK SPLIT.
4
<PAGE>
PROPOSAL NO. 2
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
The Board has approved an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock, par
value $0.001 per share ("Common Stock"), from 40,000,000 to 60,000,000. The
stockholders are being asked to approve this proposed amendment. As of
December 10, 1997, [19,144,660] shares of Common Stock were issued and
outstanding and shares were reserved for issuance under
the Company's stock plans and employee stock purchase plan. In addition, as a
result of the issuance of the Units, the Company reserved 9,000,000 shares for
issuance upon conversion of the Convertible Notes and 3,533,245 shares for
issuance upon exercise of the Warrants
The purpose of the increase in the number of authorized shares of Common
Stock is to facilitate the Private Placement described above and to increase
the Company's flexibility to issue shares of Common Stock in the future
without the expense and delay of a special stockholders' meeting. Such future
issuances could be used for possible stock dividends or stock splits, equity
financings, future opportunities for expanding the business through
investments or acquisitions, management incentive and employee benefit plans
and other general corporate purposes. Regarding the Private Placement, the
Company is obligated to seek stockholder approval for the increase in the
number of authorized shares of Common Stock. If such approval is not obtained
by January 31, 1998, holders of the Convertible Notes will be allowed to
redeem a portion of their notes at a redemption price of 135% of the principle
amount plus accrued interest from the time of the date of demand at a rate not
to exceed 11% per annum.
Authorized but unissued shares of the Company's Common Stock may be issued
at such times, for such purposes and for such consideration as the Board of
Directors may determine to be appropriate without further authority from the
Company's stockholders, except as otherwise required by applicable law or
stock exchange policies.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing stockholders. However, the Board will have the
authority to issue authorized Common Stock without requiring future
stockholder approval of such issuances, except as may be required by
applicable law or exchange regulations. Further, the holders of the
Convertible Notes and Warrants have the right to convert or exercise their
securities and receive Common Stock as described above. To the extent that the
additional authorized shares are issued in the future, they will decrease the
existing stockholders' percentage equity ownership and, depending upon the
price at which they are issued as compared to the price paid by existing
stockholders for their shares, could be dilutive to the existing stockholders.
The holders of Common Stock have no preemptive rights.
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company without further action by the
stockholders. Shares of authorized and unissued Common Stock could (within the
limits imposed by applicable law) be issued in one or more transactions which
would make a change in control of the Company more difficult, and therefore
less likely. Any such issuance of additional stock could have the effect of
diluting the earnings per share and book value per share of outstanding shares
of Common Stock, and such additional shares could be used to dilute the stock
ownership or voting rights of a person seeking to obtain control of the
Company. The Company has previously adopted certain measures that may have the
effect of helping to resist an unsolicited takeover attempt.
APPROVAL REQUIRED
Approval of Proposal No. 2 requires the affirmative vote of a majority of
the outstanding shares of Common Stock of the Company.
5
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RECOMMENDATION OF THE BOARD
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON
STOCK.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information that has been provided to the
Company with respect to beneficial ownership of shares of the Company's Common
Stock as of November 15, 1997, prior to the closing of the sale of Units
pursuant to the Private Placement described above, and without giving effect
to the issuance of shares of Common Stock upon conversion or exercise of the
securities issued in the Private Placement, for (i) each person who is known
by the Company to own beneficially more than 5% of the outstanding shares of
Common Stock, (ii) the Company's Chief Executive Officer and the Company's
other four most highly paid executive officers who earned in excess of
$100,000 during the fiscal year ended December 31, 1996 (collectively, the
"Named Executive Officers"), (iii) each director of the Company and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES PERCENT OF SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS(1) OWNED(2) OWNED(1)
- ------------------------------------------------ ------------ -----------------
<S> <C> <C>
Entities affiliated with Quaestus
Management Corporation (3)
330 E. Kilbourn Avenue
Milwaukee, WI 53202............................ 5,209,138 27.2%
Norwest Equity Partners V, L.L.P. (4)
245 Lytton Ave., Suite 250
Palo Alto, CA 94301............................ 1,918,182 10.0
Entities affiliated with 21st Century
Communications Partnerships (5)
GM Building
767 Fifth Avenue
New York, NY 10153............................. 1,515,150 7.9
RRE Connect Investors, L.P. (6)
126 East 56th St., 22nd Floor
New York, NY 10022............................. 1,174,242 6.1
Entities affiliated with
BankAmerica Ventures (6)
950 Tower Lane, Suite 700
Foster City, CA 94404.......................... 1,206,353 6.3
Gordon J. Bridge (7)............................ 745,000 3.8
Thomas P. Kehler (8)............................ 197,652 1.0
Promod Haque (4)................................ 1,918,182 10.0
Richard H. Lussier (9).......................... 38,732 *
Craig D. Norris (10)............................ 135,000 *
Rory T. O'Driscoll (7).......................... 1,206,353 6.3
Patrick D. Quirk (11)........................... -- *
Kenneth M. Ross (12)............................ 203,499 1.1
Richard W. Weening (13)......................... 5,206,120 27.2
William B. Welty (14)........................... 215,371 1.1
All directors and executive officers as a group
(13 persons)(15)............................... 10,282,158 49.4
</TABLE>
- --------
* Less than 1%.
6
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(1) Applicable percentage of beneficial ownership is based on 19,144,660
shares of Common Stock outstanding as of November 15, 1997, together with
applicable options for such stockholder. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission, based on factors including voting and investment power.
Shares of Common Stock subject to the warrants and options currently
exercisable, or exercisable within 60 days after November 15, 1997, are
deemed outstanding for computing the percentage ownership of the person
holding such options, but are not deemed outstanding for computing the
percentage ownership of any other person. Unless otherwise indicated, the
address of each of the named individuals is: c/o CONNECT, Inc., 515 Ellis
Street, Mountain View, CA 94043.
(2) To the Company's knowledge, the persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and except as indicated in the other footnotes to this
table.
(3) Includes 4,737,298 shares held by Network Partners, 7,731 shares held by
Quaestus Limited Partnership and 1,094,947 shares held by Quaestus
Partner Fund. Also includes 11,068 shares and 3,018 shares held by
Richard W. Weening and Terrence J. Leahy, respectively. Mr. Weening is
President and Chief Executive Officer and a director of Quaestus
Management Corporation. Mr. Leahy is a Vice President and Director of
Quaestus Management Corporation. Quaestus Management Corporation is the
managing general partner of Network Partners and Quaestus Partner Fund.
In addition, Mr. Weening is the President and Chief Executive Officer of
RPI Holdings, Inc., the managing general partner of Quaestus Limited
Partnership, which is managed by Quaestus Management Corporation. Mr.
Weening disclaims beneficial ownership of the shares held by such
entities, except to the extent of his proportionate interest therein.
(4) Includes 1,918,182 shares held by Norwest Equity Partners V, L.L.P.
Promod Haque is a Vice President of Norwest Venture Capital Management,
Inc. and a general partner of two general partnerships that are the
general partners of Norwest Equity Partners V, L.L.P. Mr. Haque disclaims
beneficial ownership of the shares held by such entities except to the
extent of his proportionate partnership interest therein.
(5) Includes 1,027,272 shares held by 21st Century Communications Partners,
L.P., 349,621 shares held by 21st Century Communications T-E Partners,
L.P. and 138,257 shares held by 21st Century Foreign Communications
Partners, L.P.
(6) Includes 1,085,727 shares held by BankAmerica Ventures and 120,626 shares
held by BA Venture Partners I. Rory T. O'Driscoll is a Principal of
BankAmerica Ventures and a General Partner of BA Venture Partners I. Mr.
O'Driscoll disclaims beneficial ownership of the shares held by such
entities except to the extent of his proportionate general partnership
interest in BA Venture Partners I.
(7) Includes 745,000 shares issuable upon exercise of stock options
exercisable within 60 days of November 15, 1997. A portion of the shares
issued or issuable upon exercise of stock options is subject to
repurchase by the Company at the original exercise price in the event of
termination of employment, which repurchase right lapses over time.
(8) Includes 197,652 shares issuable upon exercise of stock options
exercisable within 60 days of November 15, 1997. A portion of the shares
issued or issuable upon exercise of stock options is subject to
repurchase by the Company at the original exercise price in the event of
termination of employment, which repurchase right lapses over time. In
April 1997, Mr. Kehler resigned from his position as President and Chief
Executive Officer and is no longer an executive officer of the Company.
(9) Includes 38,732 shares issuable upon exercise of stock options
exercisable within 60 days of November 15, 1997. A portion of the shares
issued or issuable upon exercise of stock options is subject to
repurchase by the Company at the original exercise price in the event of
termination of employment, which repurchase right lapses over time.
(10) Includes 135,000 shares issuable upon exercise of stock options
exercisable within 60 days of November 15, 1997. A portion of the shares
issued or issuable upon exercise of stock options is subject to
repurchase by the Company at the original exercise price in the event of
termination of employment, which repurchase right lapses over time.
7
<PAGE>
(11) In April 1997, Mr. Quirk resigned from his position as Vice President of
Sales and is no longer an executive officer of the Company.
(12) Includes 203,499 shares issuable upon exercise of stock options
exercisable within 60 days of November 15, 1997. A portion of the shares
issued or issuable upon exercise of stock options is subject to repurchase
by the Company at the original exercise price in the event of termination
of employment, which repurchase right lapses over time.
(13) Includes 4,253,114 shares held by Network Partners, 841,038 shares held
by Quaestus Limited Partnership and 100,900 shares held by Quaestus
Partner Fund. Mr. Weening disclaims beneficial ownership of the shares
held by such entities, except to the extent of his proportionate interest
therein.
(14) Includes 123,595 shares held by Volpe Brown Whelan & Company, LLC
(formerly Volpe, Welty & Company LLC), and 91,776 shares held by
agincourt partners, llc (formerly Volpe Welty Asset Management, L.L.C.)
William B. Welty is the Chief Executive Officer and a principal
stockholder of agincourt partners, llc. In addition, until March 1997,
Mr. Welty was a stockholder of an affiliate of Volpe, Welty & Company
LLC. Mr. Welty disclaims beneficial ownership of the shares held by such
entities except to the extent of his proportionate interest therein.
(15) Includes 10,282,158 shares issuable upon exercise of stock options
exercisable within 60 days of November 15, 1997. A portion of the shares
issued or issuable upon exercise of stock options is subject to
repurchase by the Company at the original exercise price in the event of
termination of employment, which repurchase right lapses over time.
8
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to
the Special Meeting. If any other business is properly brought before the
Special Meeting, proxies in the enclosed form will be voted in respect thereof
as the proxy holders deem advisable.
It is important that the proxies be returned promptly and that your shares
be represented. Stockholders are urged to mark, date, execute and promptly
return the accompanying proxy card in the enclosed envelope.
THE BOARD OF DIRECTORS
December , 1997
Mountain View, California
9
<PAGE>
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
R
O CONNECT, INC.
X
Y 1998 SPECIAL MEETING OF STOCKHOLDERS
The undersigned stockholder of CONNECT, Inc., a Delaware corporation,
(the "Company") hereby acknowledges receipt of the Notice of Special Meeting of
Stockholders and Proxy Statement, each dated December __, 1997, and hereby
appoints Gordon J. Bridge and Joseph G. Girata, or either of them, as proxies
and attorneys-in-fact with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 1997 Special
Meeting of Stockholders of CONNECT, Inc. to be held on January 15, 1998 at 9:00
a.m. Pacific time, at the principal executive offices of the Company at 515
Ellis Street, Mountain View, California, and at any adjournment(s) or
postponement(s) thereof, and to vote all shares of Common Stock that the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below:
PROPOSAL NO. 1 - AMENDMENT TO CERTIFICATE OF INCORPORATION EFFECTING A REVERSE
COMMON STOCK SPLIT
To approve an amendment to the Company's Certificate of Incorporation
to effect a one-for-five reverse split of the Company's Common Stock.
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL NO. 2 - AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK
To approve an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Company's Common
Stock from 40,000,000 to 60,000,000 shares.
[_] FOR [_] AGAINST [_] ABSTAIN
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE>
NOTE: This Proxy should be marked, dated, signed by the stockholder(s) exactly
as his or her name appears hereon, and returned in the enclosed envelope.
In their discretion, upon such other matter or matters which may properly come
before the meeting or any postponement(s) or adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY POSTPONEMENT(S) OR
ADJOURNMENT(S) THEREOF. WITH RESPECT TO THE AMENDMENT TO THE CERTIFICATE OF
INCORPORATION EFFECTING A REVERSE COMMON STOCK SPLIT AND THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK,
IF NO CONTRARY OBJECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THESE ITEMS.
DATED: ___________________, 1997
_________________________________________
Printed name(s) exactly as shown on Stock
Certificate
_________________________________________
(Signature)
_________________________________________
(Signature)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by its President or other authorized officer. If a
partnership, please sign in partnership name by an authorized person. THIS PROXY
WILL BE VOTED FOR THE PROPOSALS IF NO SPECIFICATION IS MADE.
