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As filed with the Securities and Exchange Commission on March 9, 1998
Total Number of Pages - 9
Index to Exhibits at Page - 8
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12 (b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CONNECT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0431045
(State of incorporation or organization) (IRS Employer
Identification No.)
515 ELLIS STREET, MOUNTAIN VIEW, CA 94043-2242
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
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(Title of Class)
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Item 1. Description of Registrant's Securities to be Registered
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The following is a summary of the outstanding capital stock of the
Company:
The authorized capital stock of the Company consists of 60,000,000
shares of Common Stock, $0.001 par value per share, and 10,000,000 shares of
Preferred Stock, $0.001 par value per share. As of February 26, 1998, after
giving effect to a one for five reverse stock split on that day, there were
4,091,010 shares of Common Stock outstanding held of record by 153 record
holders of the Company's Common Stock. In addition, on February 26, 1998, there
were outstanding 4,905,209 shares of Series A Preferred Stock held of record by
13 record holders of the Company's Series A Preferred Stock.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding Preferred Stock, the holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities, subject to prior rights of Preferred Stock, if
any, then outstanding. The Common Stock has no preemptive or conversion rights
or other subscription rights. There are no redemption or sinking fund provisions
available to the Common Stock. All outstanding shares of Common Stock are fully
paid and non-assessable.
PREFERRED STOCK
Series A Preferred Stock. Of the 10,000,000 authorized shares of Preferred
Stock, the Company has designated 6,500,000 shares of Series A Preferred Stock.
The following is a summary of certain of the rights, preferences and privileges
of the Series A Preferred Stock, 4,905,209 of which are currently outstanding.
This summary is qualified by reference to the Company's Certificate of
Designation of Rights, Preferences and Privileges of Series A Preferred Stock,
which is filed as an exhibit to this Form 8-A/A.
1. Conversion. Each share of Series A Preferred Stock is convertible
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at the option of the holder into that number of shares of the Company's Common
Stock equal to the greater of (i) the quotient obtained by dividing $2.00 (the
"Preferred Cap"), plus accumulated but unpaid dividends, by the conversion price
or (ii) the quotient obtained by dividing $2.00, plus accumulated but unpaid
dividends, by 80% (60% if the conversion occurs after December 15, 1999) of the
average closing bid price for the 10 trading days prior to conversion. The
conversion price is $10.00, and is subject to adjustment in the event of future
stock splits, stock combinations and the like, and will be reduced to $7.50 on
and after December 15, 1999. The Preferred Cap also will be adjusted downward
to the lowest price at which the Company issues securities or, in the case of
convertible securities, the lowest conversion or exercise price of such
securities (excluding issuances pursuant to employee and director stock option
plans). In addition, each share of Series A Preferred Stock will automatically
convert into Common Stock on October 1, 1999, if the Company is listed on The
Nasdaq National Market at all times during 1999, an effective registration
statement relating to the resale of the shares of Common Stock issuable on
conversion of the Series A Preferred Stock has been in effect at all times
during 1999 and the price of the Company's Common Stock is at least $10.00 per
share (subject to adjustment in the event of future stock splits, stock
combinations and the like) at all times subsequent to August 15, 1999.
2. Voting Rights. Except as required by law and as set forth
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herein, the holders of Series A Preferred Stock will not be entitled to vote.
The Series A Preferred Stock terms include what are customarily called
protective provisions. Under these provisions, a vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock is required
before the Company can: (i) materially or adversely alter or change the rights,
preferences or privileges of the Series A Preferred Stock; (ii) authorize or
issue (a) shares of any class or series of stock having any preference or
priority as to dividends, liquidation or redemption over or pari passu with the
Series A Preferred Stock, (b) shares of stock of any class or any bonds,
debentures, notes or other obligations convertible into or
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exchangeable for, or having rights to purchase, any shares of stock of the
Company having any preference or priority as to dividends, liquidation or
redemption over or pari passu with the Series A Preferred Stock, or (c) any
bonds, debentures, notes or other obligations for borrowed money, except in
connection with equipment financing transactions of up to $1.5 million in any
twelve months commencing after the date of initial issuance of a share of
Series A Preferred Stock; (iii) effect any merger, consolidation or sale of
assets of the Company with, into or to another Small Corporation in which the
consideration to be received by the stockholders of the Company in the merger
is not entirely cash (for purposes of this paragraph the term "Small
Corporation" shall mean a corporation and its parent corporation (if the
securities of the parent corporation are being issued) which have a market
capitalization of less than $150 million; and for purposes of this paragraph
the term "market capitalization" shall mean the product of the number of
outstanding shares of the acquiring corporation's or its parent's common stock
(if the securities of the parent corporation are being issued) multiplied by
the average of the closing bid prices for the acquiring corporation's or its
parent's common stock (as quoted on a national securities exchange or on
NASDAQ or over-the-counter) during the 20 trading days prior to the date of
notice of the transaction to the holders of the Series A Preferred Stock; (iv)
effect any merger, consolidation or sale of assets of the Company with, into
or to another corporation in which the consideration to be received by the
stockholders of the Company in such transaction includes (1) securities that
have not been registered on an effective Form S-4 or other appropriate form of
registration statement or (2) property other than cash or securities; (v)
apply any of its assets to the redemption, retirement, purchase or
acquisition, directly or indirectly, through subsidiaries or otherwise, of any
shares of any class or series of equity securities of the Company (other than
repurchases of Common Stock from employees of and consultants to the Company
upon or after termination of employment and other than redemptions of Series A
Preferred Stock permitted by their terms); or (vi) pay any dividend or make
any distribution on shares of equity securities, other than with respect to
the Series A Preferred Stock.
3. Interest and Dividends. The holders of Series A Preferred Stock will
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be entitled to receive mandatory cumulative dividends in preference to the
holders of Common Stock at an annual rate of $.10 per share (5% of the original
$2.00 exchange price per share) from legally available funds. Such dividends
are payable quarterly and may be paid in cash or in shares of Series A Preferred
Stock, at the option of the Company.
4. Redemption Rights. The Series A Preferred Stock will not be
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redeemable at the option of the holders. The Company shall have the right to
redeem the Series A Preferred Stock at any time after November 10, 1999 at $2.00
per share plus accrued dividends. In addition, the Company shall have the right
to redeem shares of Series A Preferred Stock at a price of $2.70 per share plus
accrued dividends in the event that a holder proposes to convert such shares of
Series A Preferred Stock at a conversion price of less than $6.25 (subject to
adjustment in the event of stock splits, stock combinations and the like).
5. Certain Rights upon Liquidation or Sale of the Company. The Series A
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Preferred Stock has liquidation and dividend rights superior to those of the
Common Stock. In the event of a liquidation event, including certain mergers
and sales of the Company, holders of the Series A Preferred Stock are entitled
to receive $1.00, plus accumulated but unpaid dividends, per share of Series A
Preferred Stock held by them prior to any distribution to holders of shares of
the Company's Common Stock. After receipt of the full $1.00 per share, all
remaining assets of the Company will be distributed to holders of shares of
Series A Preferred Stock (on an as-if converted to Common Stock basis, at a per
share price of the lesser of $10.00 per share or 60% of the price per share of
Common Stock payable in the transaction) and Common Stock ratably based on the
number of shares of stock held by them.
The effect of these provisions in the context of a sale of the Company is
to distribute to the Series A Preferred Stock preferential amounts. For
example, if no shares of Series A Preferred Stock have been converted and 4
million shares of Common Stock are outstanding, for any transaction in which the
aggregate consideration is below approximately $22 million, all of the proceeds
will be payable to the holders of Series A Preferred Stock. Amounts in excess
of $22 million will be shared among the Series A Preferred Stock and the Common
Stock based on the number of shares held by each on an as-if converted basis.
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6. Registration Rights. The Company is obligated to file with the
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Securities and Exchange Commission pursuant to the terms of the Private
Placement and the Exchange, a registration statement (the "Registration
Statement") with respect to the resale of the shares issuable upon conversion of
the Series A Preferred Stock and exercise of the Warrants.
"Blank-Check" Preferred Stock. As of the date of this Form 8-A/A, the
Company has 3,500,000 authorized shares of "blank check" Preferred Stock with
such designations, rights and preferences as may be determined from time to time
by the Board of Directors, without any further vote or action by the
stockholders; provided, however, that approval by the holders of at least two-
thirds of the outstanding shares of Series A Preferred Stock will be required in
order to authorize or issue shares of any series of Preferred Stock having any
preference or priority as to dividends, liquidation or redemption over or pari
passu with the Series A Preferred Stock. The rights of the holders of the Common
Stock will be subject to, and may be adversely affected by, the rights of the
holders of any Preferred Stock that may be issued in the future. The issuance of
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company, thereby delaying, deferring or
preventing a change in control of the Company. Furthermore, such Preferred Stock
may have other rights, including economic rights, senior to the Common Stock,
and as a result, the issuance of such Preferred Stock could have a material
adverse effect on the market value of the Common Stock. Although the Company has
no present intention to issue any additional shares of its Preferred Stock
(other than shares of Series A Preferred Stock in payment of dividends), there
can be no assurance that the Company will not do so in the future. See "Delaware
Anti-Takeover Law and Certain Charter Provisions."
WARRANTS
As of the date of this Form 8-A/A, the Company has outstanding Warrants to
purchase an aggregate of up to 687,982 shares of Common Stock at an exercise
price of $12.50 per share. Each such Warrant is exercisable at any time prior
to November 2000.
REGISTRATION RIGHTS OF CERTAIN OTHER HOLDERS
Excluding the shares of Common Stock issued or issuable upon conversion of
the Series A Preferred Stock, and upon exercise of the Warrants, the holders of
approximately 3,144,477 shares of Common Stock (the "Registrable Securities") or
their transferees are entitled to certain rights with respect to the
registration of such shares under the Securities Act. These rights are provided
under the terms of agreements between the Company and the holders of Registrable
Securities. If at any time, the Company registers any of its Common Stock, the
holders of Registrable Securities are entitled to include their shares of Common
Stock in the registration. A holder's right to include shares in an
underwritten registration is subject to the ability of the underwriters to limit
the number of shares included in the offering. All registration expenses must
be borne by the Company and all selling expenses relating to Registrable
Securities must be borne by the holders of the securities being registered. In
addition, such holders may require the Company to use its best efforts to file a
registration statement under the Securities Act at the Company's expense with
respect to their shares of Common Stock, subject to certain limitations.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER PROVISIONS
Certain provisions of Delaware law and the Company's Restated Certificate
of Incorporation could make more difficult the acquisition of the Company by
means of a tender offer, a proxy contest or otherwise and the removal of
incumbent officers and directors. These provisions are expected to discourage
certain types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of the Company to first negotiate
with the Company. The Company believes that the benefits of increased
protection of the Company's potential ability to negotiate with the proponent of
an unfriendly or unsolicited proposal to acquire or restructure the Company
outweigh the disadvantages of discouraging such proposals because, among other
things, negotiation of such proposals could result in an improvement of their
terms.
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The Company is subject to the provisions of Section 203 of the Delaware
law. In general, the statute prohibits a publicly held Delaware corporation
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date that the person became an interested
stockholder unless (with certain exceptions) the business combination or the
transaction in which the person became an interested stockholder is approved in
a prescribed manner. Generally, a "business combination" includes a merger,
asset or stock sale, or other transaction resulting in a financial benefit to
the stockholder. Generally, an "interested stockholder" is a person who,
together with affiliates and associates, owns (or within three years prior,
did own) 15% or more of the corporation's voting stock. These provisions may
have the effect of delaying, deferring or preventing a change in control of
the Company without further action by the Company's stockholders.
Commencing at the first annual meeting of stockholders following the annual
meeting of stockholders when the Company shall have had at least 800
stockholders, the Restated Certificate of Incorporation of the Company will
provide for the Board of Directors to be divided into two classes, with
staggered two-year terms. As a result, only one class of directors will be
elected at each annual meeting of stockholders of the Company, with the other
class continuing for the remainder of its respective two-year term. Thereafter,
stockholders shall no longer have cumulative voting rights and the Company's
stockholders representing a majority of the shares of Common Stock outstanding
will be able to elect all of the directors. The classification of the Board of
Directors and elimination of cumulative voting make it more difficult for the
Company's existing stockholders to replace the Board of Directors as well as for
another party to obtain control of the Company by replacing the Board of
Directors. Since the Board of Directors has the power to retain and discharge
officers of the Company, these provisions could also make it more difficult for
existing stockholders or another party to effect a change in management.
The Company's Restated Certificate of Incorporation provides that
stockholder action can be taken only at an annual or special meeting of
stockholders and may not be taken by written consent. The Bylaws provide that
special meetings of stockholders can be called only by the Board of Directors,
the Chairman of the Board, if any, the President of the Company and holders of
10% of the votes entitled to be cast at a meeting. Moreover, the business
permitted to be conducted at any special meeting of stockholders is limited to
the business brought before the meeting by the Board of Directors, the Chairman
of the Board, if any, the President of the Company or any such 10% holder. The
Bylaws set forth an advance notice procedure with regard to the nomination,
other than by or at the direction of the Board of Directors, of candidates for
election as directors and with regard to business to be brought before a meeting
of stockholders of the Company.
The Company's Restated Certificate of Incorporation contains a provision
requiring the affirmative vote of the holders of at least two-thirds of the
voting stock of the Company to amend the foregoing provisions of the Restated
Certificate of Incorporation and Bylaws.
Item 2. Exhibits
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The following exhibits are filed as a part of this Registration
Statement:
1 Specimen certificate for Registrant's Common Stock -
incorporated herein by reference to Exhibit 4.1 to the
Registrant's Registration Statement on Form S-1 (SEC File
No. 333-05901).
2.1 Certificate of Incorporation -- incorporated herein by
reference to Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1.
2.2 Amended and Restated Certificate of Incorporation --
incorporated herein by reference to Exhibit 3.3 to the
Registrant's Registration Statement on Form S-1.
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2.3 Certificate of Amendment of Certificate of Incorporation -
incorporated herein by reference to Exhibit 3.4 to the
Registrant's Registration Statement on Form S-1.
2.4 Bylaws - incorporated herein by reference to Exhibit 3.2 to
the Registrant's Registration Statement on Form S-1.
2.5 Amended and Restated Registration Rights Agreement dated
July 3, 1996 between the Registrant and certain holders of
the Registrant's securities -- incorporated herein by
reference to Exhibit 10.6 to the Registrant's Registration
Statement on Form S-1.
2.6 Form of Certificate of Designation of Rights, Preferences
and Privileges of Series A Preferred Stock - incorporated
herein by reference to Exhibit 3.4 to the Form 8-K filed by
the Company with the SEC on December 22, 1997.
2.7 Form of Exchange Agreement - incorporated herein by
reference to Exhibit 4.3 to the Form 8-K filed by the
Company with the SEC on December 22, 1997.
2.8 Amendment to Amended and Restated Certificate of
Incorporation effecting the one for five reverse stock
split.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereto duly authorized.
Date: March 6, 1998 CONNECT, INC.
By: /s/ Joseph G. Girata
---------------------------------------------
Joseph G. Girata,
Vice President of Finance and
Administration and Chief Executive Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
------------
Exhibit No. Description Numbered Page
----------- ----------- -------------
<C> <S> <C>
1 Specimen certificate for Registrant's Common Stock -- Incorporated by reference
incorporated herein by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-1.
2.1 Certificate of Incorporation -- incorporated herein by reference Incorporated by reference
to Exhibit 3.1 of the Registrant's Registration Statement on Form
S-1.
2.2 Amended and Restated Certificate of Incorporation -- incorporated Incorporated by reference
herein by reference to Exhibit 3.3 to the Registrant's
Registration Statement on Form S-1.
2.3 Certificate of Amendment of Certificate of Incorporation - Incorporated by reference
incorporated herein by reference to Exhibit 3.4 to the
Registrant's Registration Statement on Form S-1.
2.4 Bylaws -- incorporated herein by reference to Exhibit 3.2 to the Incorporated by reference
Registrant's Registration Statement on Form S-1.
2.5 Amended and Restated Registration Rights Agreement dated July 3, Incorporated by reference
1996 between the Registrant and certain holders of the
Registrant's securities -- incorporated herein by reference to
Exhibit 10.6 to the Registrant's Registration Statement on Form
S-1.
2.6 Form of Proposed Certificate of Designation of Rights Preferences Incorporated by reference
and Privileges of Series A Preferred Stock - incorporated herein
by reference to Exhibit 3.4 to the Form 8-K filed by the Company
with the SEC on December 22, 1997.
2.7 Form of Exchange Agreement - incorporated herein by reference to Incorporated by reference
Exhibit 4.3 to the Form 8-K filed by the Company with the SEC on
December 22, 1997.
</TABLE>
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
------------
Exhibit No. Description Numbered Page
----------- ----------- -------------
<C> <S> <C>
2.8 Amendment to Amended and Restated Certificate of Incorporation 10
effecting the one for five reverse stock split.
</TABLE>
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Exhibit 2.8
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CONNECT, INC.
The undersigned hereby certifies that:
1. He is the duly elected and acting Chief Executive Officer of CONNECT,
Inc., a Delaware corporation.
2. The Certificate of Incorporation of this corporation was originally
filed with the Secretary of State of Delaware on May 20, 1996.
3. Pursuant to Section 242 of the General Corporation Law of the State of
Delaware, this Certificate of Amendment of Certificate of Incorporation replaces
the second sentence of Article 3 of this corporation's Amended and Restated
Certificate of Incorporation to read in its entirety as follows:
"The total number of shares of Preferred Stock authorized is 36,140,498 and
the total number of shares of Common Stock authorized is 60,000,000. Upon
the close of business in Delaware on February 26, 1998 (the "Effective
---------
Date"), each outstanding share of this corporation's Common Stock shall be
converted and reconstituted into 0.20 of a share of this corporation's
Common Stock (the "Common Reverse Split"). Any fractional number of shares
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remaining after applying the Common Reverse Split to each certificate
representing shares of Common Stock then held by any holder shall be
redeemed at a purchase price equal to the closing bid price of the
corporation's common stock on the Effective Date. Shares of Common Stock
that were outstanding prior to the Common Reverse Split, and that are not
outstanding after and as a result of the Common Reverse Split, shall resume
the status of authorized but unissued shares of Common Stock."
4. The foregoing Certificate of Amendment has been duly adopted by
this corporation's Board of Directors and stockholders in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the State
of Delaware.
5. The effective date of this Certificate of Amendment of Amended and
Restated Certificate of Incorporation is the close of business in Delaware on
February 26, 1998.
Executed at Mountain View, California, February 24, 1998.
/s/ Gordon J. Bridge
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Gordon J. Bridge
Chief Executive Officer
