September 29, 2000
BY EDGAR
--------
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Attention: Filing Desk
Re: CMGI, Inc. Rule 424(b) Prospectus Supplement
to the Registration Statement on Form S-3 (File No. 333-44276)
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Ladies and Gentlemen:
Attached for filing on behalf of CMGI, Inc., a Delaware
corporation (the "Company"), in accordance with Rule 424(b) under the
Securities Act of 1933, as amended (the "Act"), and the General Rules and
Regulations thereunder, we submit by EDGAR, in accordance with Regulation
S-T, a prospectus supplement to the Company's Registration Statement on
Form S-3 (No. 333-44276), which was declared effective by the Securities
and Exchange Commission at approximately 4:30 p.m., Eastern time, on
Monday, September 11th, 2000. Pursuant to Rule 424(e) under the Securities
Act, the enclosed prospectus supplement contains, in the upper right corner
of the cover page, the paragraph and subparagraph of Rule 424 under which
this filing is made.
If there are any questions with respect to the enclosed
materials, please do not hesitate to call me at (978) 247-5833.
Very truly yours,
/s/ Christopher R. Stone, Esq.
cc: David S. Wetherell
Andrew J. Hajducky III
William Williams II
Enclosures
As filed pursuant to Rule 424(b)(3)
Registration No. 333-44276
Prospectus Supplement No. 1
(to Prospectus dated September 11, 2000)
7,250,615 SHARES
COMMON STOCK
CMGI, INC.
100 Brickstone Square
Andover, Massachusetts 01810
(978) 684-3600
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The consideration paid to the former stockholders of Tallan, Inc. for
our purchase of a controlling interest in Tallan, Inc. on March 31, 2000,
included three promissory notes. One note, in the principal amount of
$241,794,649.00, matures on September 30, 2000 and two notes, in the
aggregate principal amount of $135,101,879.00, mature on December 31, 2000.
We have the option, on or before the maturity of the notes, of paying some
or all of the principal and interest owed on the notes in our common stock.
We put these notes in escrow on behalf of the former Tallan, Inc.
stockholders, pending payment on or before maturity and, in the case of one
of the notes maturing on December 31, 2000 in the principal amount of
$50,000,000.00, pending the resolution of indemnification claims, if any.
This prospectus supplement relates to the offer and resale by the former
stockholders of Tallan, Inc. of the shares of our common stock that we will
issue upon payment of the promissory note maturing on September 30, 2000.
We valued the shares of our common stock to be issued upon payment of
the promissory note maturing on September 30, 2000 based upon the average
of the closing price per share of our common stock, as reported on the
Nasdaq National Market (the "Nasdaq"), on the five consecutive trading days
immediately preceding the third trading day prior to the date of payment of
the respective note. Using this formula, the value of our common stock that
we will issue upon payment of the promissory note maturing on September 30,
2000 is $34.45 per share, calculated upon a September 30, 2000 payment
date.
Our common stock is traded on the Nasdaq under the ticker symbol
"CMGI." On September 26, 2000, the last reported sales price of the common
stock was $30.44 per share.
The selling stockholders identified in this prospectus supplement, or
their pledgees, donees, transferees or other successors-in-interest, may
offer the shares from time to time through public or private transactions
at prevailing market prices, at prices related to prevailing market prices
or at privately negotiated prices. More detailed information concerning the
distribution of the shares is contained in the section of this prospectus
supplement entitled "Plan of Distribution" which begins on page 16.
We urge you to read this prospectus supplement and the prospectus
dated September 11, 2000 carefully before you make your investment
decision.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES
REGULATORS HAVE NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS DATED SEPTEMBER
11, 2000 IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 1.
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The date of this prospectus supplement is September 29, 2000
TABLE OF CONTENTS
Page
RISK FACTORS ................................................................1
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS.............................8
ABOUT THIS PROSPECTUS........................................................9
DESCRIPTION OF CAPITAL STOCK.................................................9
USE OF PROCEEDS.............................................................14
THE SELLING STOCKHOLDERS....................................................14
PLAN OF DISTRIBUTION........................................................15
LEGAL MATTERS...............................................................17
EXPERTS.....................................................................17
WHERE YOU CAN FIND MORE INFORMATION ABOUT US................................18
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................20
RISK FACTORS
An investment in our securities is extremely risky. This section
describes risks involved in purchasing our securities. Before you invest in
our securities, you should consider carefully the following risks, in
addition to the other information presented in this prospectus supplement,
the prospectus filed on September 11, 2000 and the other documents
incorporated by reference into this prospectus supplement, in evaluating us
and our business. Any of the following risks could seriously harm our
business and financial results and cause the value of our securities to
decline, which in turn could cause you to lose all or part of your
investment.
RISKS PARTICULAR TO CMGI
WE MAY NOT HAVE OPERATING INCOME OR NET INCOME IN THE FUTURE.
During the fiscal year ended July 31, 1999 and for the nine months
ended April 30, 2000, we had an operating loss of approximately $127
million and $1.4 billion, respectively. We anticipate continuing to incur
significant operating expenses in the future, including significant costs
of revenues and selling, general and administrative and amortization
expenses. As a result, we expect to continue to incur operating losses and
may not have enough money to grow our business in the future. We cannot
assure you that we will achieve profitability or be capable of sustaining
profitable operations.
WE MAY HAVE PROBLEMS RAISING MONEY WE NEED IN THE FUTURE.
In recent years, we have financed our operating losses in part with
profits from selling some of the stock of companies in which we had
invested through our @Ventures funds. This funding source may not be
sufficient in the future, and we may need to obtain funding from outside
sources. However, we may not be able to obtain funding from outside
sources. In addition, even if we find outside funding sources, we may be
required to issue to such outside sources securities with greater rights
than those currently possessed by holders of shares of our common stock. We
may also be required to take other actions, which may lessen the value of
our common stock, including borrowing money on terms that are not favorable
to us.
WE MAY INCUR SIGNIFICANT COSTS TO AVOID INVESTMENT COMPANY STATUS AND MAY
SUFFER ADVERSE CONSEQUENCES IF DEEMED TO BE AN INVESTMENT COMPANY.
We may incur significant costs to avoid investment company status and
may suffer other adverse consequences if deemed to be an investment company
under the Investment Company Act of 1940. Some of our equity investments in
other businesses and our venture subsidiaries may constitute investment
securities under the Investment Company Act. A company may be deemed to be
an investment company if it owns investment securities with a value
exceeding 40% of its total assets, subject to certain exclusions.
Investment companies are subject to registration under, and compliance
with, the Investment Company Act unless a particular exclusion or safe
harbor provision applies. If we were to be deemed an investment company, we
would become subject to the requirements of the Investment Company Act. As
a consequence, we would be prohibited from engaging in business or issuing
our securities as we have in the past and might be subject to civil and
criminal penalties for noncompliance. In addition, certain of our contracts
might be voidable, and a court-appointed receiver could take control of us
and liquidate our business.
Although our investment securities currently comprise less than 40% of
our total assets, fluctuations in the value of these securities or of our
other assets may cause this limit to be exceeded. Unless an exclusion or
safe harbor was available to us, we would have to attempt to reduce our
investment securities as a percentage of our total assets. This reduction
can be attempted in a number of ways, including the disposition of
investment securities and the acquisition of non-investment security
assets. If we were required to sell investment securities, we may sell them
sooner than we otherwise would. These sales may be at depressed prices and
we may never realize anticipated benefits from, or may incur losses on,
these investments. We may be unable to sell some investments due to
contractual or legal restrictions or the inability to locate a suitable
buyer. Moreover, we may incur tax liabilities when we sell assets. We may
also be unable to purchase additional investment securities that may be
important to our operating strategy. If we decide to acquire non-investment
security assets, we may not be able to identify and acquire suitable assets
and businesses or the terms on which we are able to acquire such assets may
be unfavorable.
WE DEPEND ON CERTAIN IMPORTANT EMPLOYEES, AND THE LOSS OF ANY OF THOSE
EMPLOYEES MAY HARM OUR BUSINESS.
Our performance is substantially dependent on the performance of our
executive officers and other key employees, in particular, David S.
Wetherell, our chairman, president and chief executive officer, Andrew J.
Hajducky III, our executive vice president, chief financial officer and
treasurer, and David Andonian, our president, corporate development. The
familiarity of these individuals with the Internet industry makes them
especially critical to our success. In addition, our success is dependent
on our ability to attract, train, retain and motivate high quality
personnel, especially for our management team. The loss of the services of
any of our executive officers or key employees may harm our business. Our
success also depends on our continuing ability to attract, train, retain
and motivate other highly qualified technical and managerial personnel.
Competition for such personnel is intense.
THERE MAY BE CONFLICTS OF INTEREST AMONG OUR NETWORK COMPANIES, OUR
OFFICERS, DIRECTORS AND STOCKHOLDERS AND US.
Some of our officers and directors also serve as officers or directors
of one or more of our network companies. As a result we, our officers and
directors, and our network companies may face potential conflicts of
interest with each other and with our stockholders. Specifically, our
officers and directors may be presented with situations in their capacity
as officers or directors of one of our network companies that conflict with
their fiduciary obligations as officers or directors of our company or of
another network company.
IN FISCAL 1999 AND THE FIRST NINE MONTHS OF FISCAL 2000, WE DERIVED A
SIGNIFICANT PORTION OF OUR REVENUES FROM A SMALL NUMBER OF CUSTOMERS AND
THE LOSS OF ANY OF THOSE CUSTOMERS COULD SIGNIFICANTLY DAMAGE OUR BUSINESS.
During the fiscal year ended July 31, 1999, sales to Cisco Systems,
Inc. accounted for 36% of our total revenues and 47% of our revenues from
our fulfillment services segment. During the nine months ended April 30,
2000, sales to Cisco accounted for 13.4% of our total revenues and 56.4% of
our revenues from our fulfillment services segment. We currently do not
have any agreements with Cisco which obligate this customer to buy a
minimum amount of products from us or to designate us as its sole supplier
of any particular products or services. During the nine months ended April
30, 2000, approximately 16.5% of our total revenues and 21% of revenues
from our Internet segment were derived from customer advertising contracts
serviced by DoubleClick, Inc. We believe that we will continue to derive a
significant portion of our operating revenue from sales to a small number
of customers.
OUR STRATEGY OF SELLING ASSETS OF OR INVESTMENTS IN THE COMPANIES THAT WE
HAVE ACQUIRED AND DEVELOPED PRESENTS RISKS.
One element of our business plan involves raising cash for working
capital for our Internet business by selling, in public or private
offerings, some of the companies, or portions of the companies, that we
have acquired and developed. Market and other conditions largely beyond our
control affect:
o our ability to engage in such sales;
o the timing of such sales; and
o the amount of proceeds from such sales.
As a result, we may not be able to sell some of these assets. In
addition, even if we are able to sell, we may not be able to sell at
favorable prices. If we are unable to sell these assets at favorable
prices, our business will be harmed.
OUR STOCK PRICE MAY FLUCTUATE BECAUSE THE VALUE OF SOME OF OUR COMPANIES
FLUCTUATES.
A portion of our assets include the equity securities of both publicly
traded and non-publicly traded companies. For example, we, directly or
through our @Ventures funds, own a significant number of shares of common
stock of Critical Path, Engage, Hollywood Entertainment, Kana
Communications, Lycos, Marketing Services Group, MotherNature.com,
NaviSite, Netcentives, Pacific Century CyberWorks, Primedia, Ventro and
Vicinity, which are publicly traded companies. The market price and
valuations of the securities that we hold in these and other companies may
fluctuate due to market conditions and other conditions over which we have
no control. Fluctuations in the market price and valuations of the
securities that we hold in other companies may result in fluctuations of
the market price of our common stock and may reduce the amount of working
capital available to us.
OUR STRATEGY OF EXPANDING OUR BUSINESS THROUGH ACQUISITIONS OF OTHER
BUSINESSES AND TECHNOLOGIES PRESENTS SPECIAL RISKS.
We intend to continue to expand through the acquisition of businesses,
technologies, products and services from other businesses. Acquisitions
involve a number of special problems, including:
o difficulty integrating acquired technologies, operations, and
personnel with our existing businesses;
o diversion of management attention in connection with both
negotiating the acquisitions and integrating the assets;
o strain on managerial and operational resources as management
tries to oversee larger operations;
o exposure to unforeseen liabilities of acquired companies;
o potential issuance of securities in connection with an
acquisition with rights that are superior to the rights of
holders of our currently outstanding securities;
o the need to incur additional debt; and
o the requirement to record potentially significant additional
future operating costs for the amortization of goodwill and other
intangible assets.
We may not be able to successfully address these problems. Moreover,
our future operating results will depend to a significant degree on our
ability to successfully manage growth and integrate acquisitions. In
addition, many of our investments are in early-stage companies with limited
operating histories and limited or no revenues. We may not be able to
successfully develop these young companies.
WE FACE COMPETITION FROM OTHER ACQUIRORS OF AND INVESTORS IN
INTERNET-RELATED VENTURES WHICH MAY PREVENT US FROM REALIZING STRATEGIC
OPPORTUNITIES.
Although we create many of our network companies ourselves, we also
acquire or invest in existing companies that we believe are complementary
to our network and further our vision of the Internet. In pursuing these
opportunities, we face competition from other capital providers and
incubators of Internet-related companies, including publicly-traded
Internet companies, venture capital companies and large corporations. Some
of these competitors have greater financial resources than we do. This
competition may limit our opportunity to acquire interests in companies
that could advance our vision of the Internet and increase our value.
OUR GROWTH PLACES STRAIN ON OUR MANAGERIAL, OPERATIONAL AND FINANCIAL
RESOURCES.
Our rapid growth has placed, and is expected to continue to place, a
significant strain on our managerial, operational and financial resources.
Further, as the number of our users, advertisers and other business
partners grows, we will be required to manage multiple relationships with
various customers, strategic partners and other third parties. Our further
growth or an increase in the number of our strategic relationships will
increase this strain on our managerial, operational and financial
resources, inhibiting our ability to achieve the rapid execution necessary
to successfully implement our business plan.
WE MUST DEVELOP AND MAINTAIN POSITIVE BRAND NAME AWARENESS.
We believe that establishing and maintaining our brand names is
essential to expanding our Internet business and attracting new customers.
We also believe that the importance of brand name recognition will increase
in the future because of the growing number of Internet companies that will
need to differentiate themselves. Promotion and enhancement of our brand
names will depend largely on our ability to provide consistently
high-quality products and services. If we are unable to provide
high-quality products and services, the value of our brand names may
suffer.
OUR QUARTERLY RESULTS MAY FLUCTUATE WIDELY.
Our operating results have fluctuated widely on a quarterly basis
during the last several years, and we expect to experience significant
fluctuation in future quarterly operating results. Many factors, some of
which are beyond our control, have contributed to these quarterly
fluctuations in the past and may continue to do so. Such factors include:
o demand for our products and services;
o payment of costs associated with our acquisitions, sales of
assets and investments;
o timing of sales of assets;
o market acceptance of new products and services;
o specific economic conditions in the Internet and direct marketing
industries; and
o general economic conditions.
The emerging nature of the commercial uses of the Internet makes
predictions concerning our future revenues difficult. We believe that
period-to-period comparisons of our results of operations will not
necessarily be meaningful and should not be relied upon as indicative of
our future performance. It is also possible that in some fiscal quarters,
our operating results will be below the expectations of securities analysts
and investors. In such circumstances, the price of our common stock may
decline.
THE PRICE OF OUR COMMON STOCK HAS BEEN VOLATILE.
The market price of our common stock has been, and is likely to
continue to be, volatile, experiencing wide fluctuations. In recent years,
the stock market has experienced significant price and volume fluctuations
which have particularly impacted the market prices of equity securities of
many companies providing Internet-related products and services. Some of
these fluctuations appear to be unrelated or disproportionate to the
operating performance of such companies. Future market movements may
adversely affect the market price of our common stock.
OWNERSHIP OF CMGI IS CONCENTRATED.
David S. Wetherell, our chairman, president and chief executive
officer, beneficially owned approximately 12% of our outstanding common
stock as of April 30, 2000. As a result, Mr. Wetherell possesses
significant influence over CMGI on matters, including the election of
directors. Additionally, Compaq Computer Corporation owned approximately
15% of our outstanding common stock as of April 30, 2000. The concentration
of our share ownership may:
o delay or prevent a change in our control;
o impede a merger, consolidation, takeover, or other transaction
involving CMGI; or
o discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of CMGI.
WE RELY ON NAVISITE FOR WEB SITE HOSTING.
We and many of our operating companies rely on NaviSite for network
connectivity and hosting of servers. If NaviSite fails to perform such
services, our internal business operations may be interrupted, and the
ability of our operating companies to provide services to customers may
also be interrupted. Such interruptions may have an adverse impact on our
business and revenues and our operating companies.
CMGI LITIGATION.
On February 9, 2000, International Merchandising Corporation and
International Managements, Inc. (collectively, "IMG") filed a complaint in
the United States District Court for the Northern District of Ohio, Eastern
Division, against Signatures SNI, Inc., Signatures Network, Inc.
(collectively "Signatures") subsidiaries of iCAST, iCAST, a subsidiary of
CMGI, and CMGI. The complaint asserted claims against Signatures for breach
of contract, promissory estoppel, and quantum meruit and claims against
CMGI and iCAST for tortious interference with contract and tortious
interference with prospective contractual relations. The complaint sought
compensatory damages of not less than $15,000,000, Signatures stock
options, the unspecified value of alleged services performed by IMG,
unspecified punitive damages, and costs. On February 22, 2000, IMG filed
with the court a motion to compel arbitration. On April 1, 2000, the
parties entered into an Alternative Dispute Resolution Agreement, pursuant
to which IMG voluntarily withdrew its motion to compel arbitration and
agreed to waive its claim for punitive damages. The parties agreed to
submit all claims they may have against each other to mediation and, if
mediation proves to be unsuccessful, to private, binding arbitration. On
April 7, 2000, IMG filed with the court its notice of voluntary dismissal
of the federal court action. The parties are currently mediating the
dispute. The defendants believe that they have valid defenses to IMG's
asserted claims. If we do not prevail, the outcome could adversely affect
our financial condition and results of operations.
Neil Braun, the former president and chief executive officer of iCAST
Corporation, a subsidiary of CMGI, filed a complaint in the United States
District Court, Southern District of New York, on December 22, 1999 against
CMGI, iCAST and David S. Wetherell, chief executive officer and chairman of
CMGI, alleging certain claims arising out of the termination of Mr. Braun's
employment with iCAST. As set forth in the complaint, Mr. Braun is seeking,
among other things, monetary damages in excess of $50 million and specific
performance of certain alleged contractual obligations that would require
iCAST to deliver to Mr. Braun an equity interest in iCAST. On January 31,
2000, an answer to the complaint was filed on behalf of CMGI, iCAST and Mr.
Wetherell. The parties are currently engaged in discovery. The defendants
plan to vigorously defend against these claims. If we do not prevail in
this proceeding, the outcome could adversely affect our financial condition
and results of operations. The parties are currently conducting discovery
in this matter.
RISKS PARTICULAR TO OUR NETWORK COMPANIES
THE SUCCESS OF OUR NETWORK COMPANIES DEPENDS GREATLY ON INCREASED USE OF
THE INTERNET BY BUSINESS AND INDIVIDUALS.
The success of our network companies depends greatly on increased use
of the Internet for advertising, marketing, providing services and
conducting business. Commercial use of the Internet is currently at an
early stage of development and the future of the Internet is not clear. In
addition, it is not clear how effective advertising on the Internet is in
generating business as compared to more traditional types of advertising
such as print, television and radio. The businesses of our network
companies will suffer if commercial use of the Internet fails to grow in
the future.
OUR NETWORK COMPANIES ARE SUBJECT TO INTENSE COMPETITION.
The market for Internet products and services is highly competitive.
Moreover, the market for Internet products and services lacks significant
barriers to entry, enabling new businesses to enter this market relatively
easily. Competition in the market for Internet products and services may
intensify in the future. Numerous well-established companies and smaller
entrepreneurial companies are focusing significant resources on developing
and marketing products and services that will compete with the products and
services of our network companies. In addition, many of the current and
potential competitors of our network companies have greater financial,
technical, operational and marketing resources than those of our network
companies. Our network companies may not be able to compete successfully
against these competitors. Competitive pressures may also force prices for
Internet goods and services down and such price reductions may reduce the
revenues of our network companies.
GROWING CONCERNS ABOUT THE USE OF "COOKIES" MAY LIMIT ENGAGE'S ABILITY TO
DEVELOP USER PROFILES.
Web sites typically place small files of information commonly known as
"cookies" on a user's hard drive, generally without the user's knowledge or
consent. Cookie information is passed to the Web site through the Internet
user's browser software. Engage's technology currently uses cookies to
collect information about an Internet user's movement through the Internet.
Most of the currently available Internet browsers allow users to modify
their browser settings to prevent cookies from being stored on their hard
drive, and a small minority of users currently choose to do so. Users can
also delete cookies from their hard drive at any time. In addition,
Microsoft, the leading provider of computer browser software, has announced
a plan to modify its product to prompt users in certain situations when
cookies are set on a user's computer. Some Internet commentators and
privacy advocates have suggested limiting or eliminating the use of
cookies, and recently, the FTC initiated an informal inquiry into the data
collection practices of DoubleClick, Inc. The effectiveness of Engage's
technology could be limited by any reduction or limitation in the use of
cookies. If the use or effectiveness of cookies is limited, Engage would
likely have to switch to other technology that would allow it to gather
demographic and behavioral information. This could require significant
reengineering time and resources, might not be completed in time to avoid
negative consequences to our business, financial condition or results of
operations, and might not be possible at all.
IF THE UNITED STATES OR OTHER GOVERNMENTS REGULATE THE INTERNET MORE
CLOSELY, THE BUSINESSES OF OUR NETWORK COMPANIES MAY BE HARMED.
Because of the Internet's popularity and increasing use, new laws and
regulations may be adopted. These laws and regulations may cover issues
such as privacy, pricing, taxation and content. The enactment of any
additional laws or regulations may impede the growth of the Internet and
the Internet-related business of our network companies and could place
additional financial burdens on their businesses.
TO SUCCEED, OUR NETWORK COMPANIES MUST RESPOND TO THE RAPID CHANGES IN
TECHNOLOGY AND DISTRIBUTION CHANNELS RELATED TO THE INTERNET.
The markets for the Internet products and services of our network
companies are characterized by:
o rapidly changing technology;
o evolving industry standards;
o frequent new product and service introductions;
o shifting distribution channels; and
o changing customer demands.
The success of our network companies will depend on their ability to
adapt to this rapidly evolving marketplace. They may not be able to
adequately adapt their products and services or to acquire new products and
services that can compete successfully. In addition, our network companies
may not be able to establish and maintain effective distribution channels.
OUR NETWORK COMPANIES FACE SECURITY RISKS.
Consumer concerns about the security of transmissions of confidential
information over public telecommunications facilities is a significant
barrier to electronic commerce and communications on the Internet. Many
factors may cause compromises or breaches of the security systems our
network companies or other Internet sites use to protect proprietary
information, including advances in computer and software functionality or
new discoveries in the field of cryptography. A compromise of security on
the Internet would have a negative effect on the use of the Internet for
commerce and communications and negatively impact our network companies'
businesses. Security breaches of their activities or the activities of
their customers and sponsors involving the storage and transmission of
proprietary information, such as credit card numbers, may expose our
network companies to a risk of loss or litigation and possible liability.
We cannot assure that the security measures of our network companies will
prevent security breaches.
THE SUCCESS OF THE GLOBAL OPERATIONS OF OUR NETWORK COMPANIES IS SUBJECT TO
SPECIAL RISKS AND COSTS.
Our network companies have begun, and intend to continue, to expand
their operations outside of the United States. This international expansion
will require significant management attention and financial resources. The
ability of our network companies to expand their offerings of our products
and services internationally will be limited by the general acceptance of
the Internet and intranets in other countries. In addition, we and our
network companies have limited experience in such international activities.
Accordingly, we and our network companies expect to commit substantial time
and development resources to customizing the products and services of our
network companies for selected international markets and to developing
international sales and support channels.
We expect that the export sales of our network companies will be
denominated predominantly in United States dollars. As a result, an
increase in the value of the United States dollar relative to other
currencies may make the products and services of our network companies more
expensive and, therefore, potentially less competitive in international
markets. As our network companies increase their international sales, their
total revenues may also be affected to a greater extent by seasonal
fluctuations resulting from lower sales that typically occur during the
summer months in Europe and other parts of the world.
OUR NETWORK COMPANIES COULD BE SUBJECT TO INFRINGEMENT CLAIMS.
From time to time, our network companies have been, and expect to
continue to be, subject to third party claims in the ordinary course of
business, including claims of our alleged infringement of intellectual
property rights. Any such claims may damage the businesses of our network
companies by:
o subjecting them to significant liability for damages;
o resulting in invalidation of their proprietary rights;
o being time-consuming and expensive to defend even if such claims
are not meritorious; and
o resulting in the diversion of management time and attention.
OUR NETWORK COMPANIES MAY HAVE LIABILITY FOR INFORMATION RETRIEVED FROM THE
INTERNET.
Because materials may be downloaded from the Internet and subsequently
distributed to others, our network companies may be subject to claims for
defamation, negligence, copyright or trademark infringement, personal
injury or other theories based on the nature, content, publication and
distribution of such materials.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement contains or incorporates by reference
forward-looking statements. These are statements that relate to future
periods and include statements about our:
o expected operating results;
o market opportunities;
o acquisition opportunities;
o ability to compete; and
o stock price.
In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "could," "potential,"
"continue," "expects," "anticipates," "intends," "plans," "believes,"
"predicts," "estimates" and similar expressions, although not all
forward-looking statements are identified by these words. These statements
are based on our current beliefs, expectations and assumptions and are
subject to a number of risks and uncertainties. Actual results and events
may vary significantly from those discussed in the forward-looking
statements. A description of risks that could cause our results to vary
appears under the caption "Risk Factors" and elsewhere in this prospectus
supplement. In light of these assumptions, risks and uncertainties, the
forward-looking events discussed in this prospectus supplement may not
occur. These cautionary statements qualify all forward-looking statements
attributable to us or persons acting on our behalf. These forward-looking
statements are made as of the date of this prospectus supplement, and we
assume no obligation to update them even though our situation may change in
the future.
ABOUT THIS PROSPECTUS
This prospectus supplement is part of a registration statement that
we filed with the Commission using a "shelf" registration process. Under
this shelf process, the selling stockholders may sell the securities
described in this prospectus supplement in one or more offerings up to a
total of 7,250,615 shares. This prospectus supplement provides you with a
description of the securities they may offer. You should read this
prospectus supplement in conjunction with the prospectus dated September
11, 2000, together with additional information described under the heading
"Where You Can Find More Information About Us."
DESCRIPTION OF CAPITAL STOCK
The following description of our common stock and preferred stock,
together with the additional information included in any applicable
prospectus supplements, summarizes the material terms and provisions of
these types of securities. For the complete terms of our common stock and
preferred stock, please refer to our restated certificate of incorporation
and restated by-laws that are incorporated by reference into the
registration statement which includes this prospectus supplement.
Our authorized capital stock consists of 1,405,000,000 shares. These
shares consist of 1,400,000,000 shares of common stock, par value $0.01 per
share, and 5,000,000 shares of preferred stock, par value $0.01 per share,
of which 250 shares have been designated as Series A preferred stock,
50,000 shares have been designated as Series B preferred stock, 375,000
shares have been designated as Series C preferred stock and 18,090.45
shares have been designated as Series D preferred stock. On September 26,
2000, CMGI had issued and outstanding:
o approximately 310,963,694 shares of common stock;
o no shares of Series A preferred stock;
o no shares of Series B preferred stock;
o 375,000 shares of Series C preferred stock (convertible into an
aggregate of approximately 9,614,046 shares of common stock as of
September 26, 2000); and
o no shares of Series D preferred stock.
COMMON STOCK
Voting Rights. Each holder of common stock is entitled to one vote on
all matters to be voted upon by stockholders for each share held on the
record date for such vote.
Dividends. The holders of common stock, after preferences of holders of
preferred stock, are entitled to receive dividends when, as and if declared
by the board of directors out of funds legally available for dividends.
Liquidation and Dissolution. If we are liquidated or dissolved, the
holders of the common stock will be entitled to share in our assets
available for distribution to stockholders in proportion to the amount of
common stock they own. The amount available for common stockholders is
calculated after payment of liabilities. Holders of preferred stock will
receive their preferential share of our assets before the holders of the
common stock receive any assets.
Other Rights. Holders of the common stock have no right to:
o convert the common stock into any other security,
o have the common stock redeemed, or
o purchase additional shares of common stock to maintain their
proportionate interest.
The common stock does not have cumulative voting rights, which means that
the holders of a majority of the shares can elect all the directors and
that the holders of the remaining shares will not be able to elect any
directors. All outstanding shares of common stock are, and all shares of
common stock offered under a this prospectus supplement when issued will be
upon payment, validly issued, fully paid and nonassessable.
Restriction on Alienability of Securities to be Registered. The common
stock being registered herein is subject to a Trading Day Limit Agreement
between us and each selling stockholder. Under this agreement, the selling
stockholder can, on any single day on which Nasdaq is open for trading,
sell only up to 10% of the total shares issued to the selling stockholder
upon payment of any of the notes. In addition, the selling stockholder can,
beginning on the date on which the selling stockholder is issued shares
upon payment of any of the notes and ending ten trading days thereafter,
enter into a swap, hedge, collar, short sale or other arrangement that
transfers to another any of the consequences of ownership of those shares
for that period.
Transfer Agent. We have appointed EquiServe, L.P. as the transfer agent
and registrar for our common stock.
PREFERRED STOCK
General. Our restated certificate of incorporation authorizes the board
of directors to issue, without any further action by the stockholders, the
preferred stock in one or more series, to establish from time to time the
number of shares to be included in each series, and to fix the designation,
powers, preferences and rights of the shares of each series and the
qualifications, limitations or restrictions thereof, including voting
rights, dividend rights, conversion rights, liquidation preferences,
redemption privileges and sinking fund terms. The rights, preferences,
privileges and restrictions of the preferred stock of each series will be
fixed by the certificate of designation relating to that series. Any or all
of the rights of the preferred stock may be greater than the rights of the
common stock.
In addition, the preferred stock could have other rights, including
economic rights senior to our common stock, so that the issuance of the
preferred stock could adversely affect the market value of our common
stock. The issuance of the preferred stock may also have the effect of
delaying, deferring or preventing a change in control of us without any
action by the stockholders.
SERIES C PREFERRED STOCK
Voting Rights. Holders of shares of Series C preferred stock have no
voting rights except as otherwise provided by the Delaware corporation
statute and our restated certificate of incorporation. On such matters
where the holders of shares of Series C preferred stock have a right to
vote with the holders of common stock, they are entitled to vote their
shares on an as-converted basis. Our restated certificate of incorporation
also gives the holders of shares of Series C preferred stock the right to
vote on enumerated actions that if taken by us would impair their rights,
preferences and privileges. Prior to us taking any such action, the
affirmative vote of the holders of a majority of the outstanding shares of
Series C preferred stock is required.
Dividend Rights. Holders of Series C convertible preferred stock are
entitled to receive when, as and if declared by the board of directors, out
of funds legally available for dividends, cumulative dividends equal to two
percent per annum of the stated value of $1,000 per share, payable
semiannually in arrears, either in cash or, at our option, through an
adjustment to the liquidation preference per share. Such adjustments, if
any, will also increase the number of shares of common stock into which
shares of Series C preferred stock is convertible.
Liquidation and Dissolution. In the event of any liquidation or
dissolution of us, the holders of Series C preferred stock are entitled to
receive, prior to any distribution to holders of common stock, an amount
equal to the stated value of $1,000 per share plus all adjustments to the
liquidation preference plus accrued but unpaid dividends to which no
adjustment has been made (the sum of which is referred to as the
liquidation preference).
Our restated certificate of incorporation specifies that upon the
occurrence of enumerated corporate events, including the consummation of a
transaction in which our stockholders do not own at least 50% of the voting
power of the combined company, the holders of two-thirds of the outstanding
shares of Series C preferred stock may elect either:
o to treat such events as a liquidation event and receive a
liquidation distribution; or
o to have the conversion price for each share of Series C preferred
stock adjusted accordingly.
Conversion. The shares of Series C preferred stock are segregated into
three equal tranches of 125,000 shares each. The shares in each tranche
have identical rights and preferences except as to conversion. The
conversion price calculated for each tranche is also subject to adjustment
for certain actions described in our restated certificate of incorporation.
Shares of Series C preferred stock may be converted into common stock at
any time at the option of the holders and automatically convert into common
stock on June 30, 2002, as described in the restated certificate of
incorporation.
The restated certificate of incorporation provides that a holder of
Series C preferred stock may not choose to convert such shares into common
stock totaling more than 9.9% of outstanding shares of common stock.
Redemption Rights. Holders of shares of Series C preferred stock have
the right to cause us to redeem their shares upon the occurrence of events
specified in our restated certificate of incorporation, including our
failure to issue shares of common stock upon conversion by holders of
shares of Series C preferred stock. The redemption price will be an stock
demanding redemption.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
We have shares of common stock and preferred stock available for
future issuance without stockholder approval. These additional shares may
be utilized for a variety of corporate purposes, including future public
offerings to raise additional capital, facilitate corporate acquisitions or
payable as a dividend on the capital stock.
The existence of unissued and unreserved common stock and preferred
stock may enable the board of directors to issue shares to persons friendly
to current management or to issue preferred stock with terms that could
render more difficult or discourage an attempt to obtain control of us by
means of a merger, tender offer, proxy contest or otherwise, thereby
protecting the continuity of our management. In addition, the issuance of
preferred stock could adversely affect the voting power of holders of
common stock and the likelihood that such holders will receive dividend
payments and payments upon liquidation.
CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION AND THE
RESTATED BY-LAWS
Our restated certificate of incorporation and restated by-laws include
provisions that could make it more difficult to acquire us by means of a
merger, tender offer, proxy contest or otherwise. These provisions, as
described below, are expected to discourage certain types of coercive
takeover practices and inadequate takeover bids and to encourage persons
seeking to acquire control of us first to negotiate with us. We believe
that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to
acquire or restructure us outweigh the disadvantages of discouraging such
proposals because, among other things, negotiations with respect to such
proposals could result in terms more favorable to us.
Our restated certificate of incorporation and restated by-laws provide
that the board of directors will be divided into three classes of
directors, with the term of each class expiring in a different year. Our
restated by-laws provide that the number of directors will be fixed from
time to time exclusively by the board of directors, but shall consist of
not more than fifteen nor less than three directors. A majority of the
board of directors then in office has the sole authority to fill any
vacancies on the board of directors. Our restated certificate of
incorporation provides that directors may be removed only by the
affirmative vote of holders of at least 75% of the voting power of all of
the then outstanding shares of stock entitled to vote generally in the
election of directors, voting together as a single class.
Our restated certificate of incorporation provides that stockholder
action can be taken only at an annual or special meeting of stockholders
and prohibits stockholder action by written consent in lieu of a meeting.
Our restated certificate of incorporation and restated by-laws provide that
special meetings of stockholders can be called by the chairman of the board
of directors, or pursuant to a resolution approved by a majority of the
total number of directors which we would have if there were no vacancies on
the board of directors, or by the stockholders owning at least 20% of the
stock entitled to vote at the meeting. The business permitted to be
conducted at any special meeting of stockholders is limited to the business
brought before the meeting by the chairman of the board, or at the request
of a majority of the whole board of directors, or as specified in the
stockholders' call for such meeting.
Our restated by-laws 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 to the board of directors and with
regard to business brought before an annual meeting of stockholders.
Our restated certificate of incorporation and restated by-laws contain
provisions requiring the affirmative vote of the holders of at least 75% of
the voting stock, voting together as a single class, to amend certain
provisions of the restated certificate of incorporation relating primarily
to anti-takeover provisions and to the limitation of director liability.
The restated certificate of incorporation empowers the board of
directors, when considering a tender offer or merger or acquisition
proposal, to take into account factors in addition to potential economic
benefits to stockholders. Such factors may include:
o comparison of the proposed consideration to be received by
stockholders in relation to the then current market price of the
capital stock, our estimated current value in a freely negotiated
transaction, and our estimated future value as an independent
entity;
o the impact of such a transaction on our customers and employees,
and its effect on the communities in which we operate; and
o our ability to fulfill our objectives under applicable statutes
and regulations.
Our restated certificate of incorporation prohibits us from purchasing
any shares of our stock from any person, entity or group that beneficially
owns 5% or more of our voting stock at a price exceeding the average
closing price for the twenty trading business days prior to the purchase
date, unless a majority of our disinterested stockholders approve the
transaction. This restriction on purchases by us does not apply to any
offer to purchase shares of a class of our stock which is made on the same
terms and conditions to all holders of that class of stock, to any purchase
of stock owned by such a 5% stockholder occurring more than two years after
such stockholder's last acquisition of our stock, to any purchase of our
stock in accordance with the terms of any stock option or employee benefit
plan, or to any purchase at prevailing market prices pursuant to a stock
purchase program.
Our restated certificate of incorporation contains a provision
requiring the affirmative vote of the holders of at least 75% of the voting
stock, voting together as a single class, to approve any business
combination not approved by the affirmative vote of a majority of the total
number of directors. This requirement is in addition to the requirements of
Section 203 of the Delaware General Corporation Law.
CMGI, INC.
CMGI is a leading global Internet company. Our strategy is to create or
acquire, and then operate, companies that can fulfill our vision of a
personalized, content and service-rich Internet that is easy to use and
accessible globally. We focus on four key areas of the Internet from both a
business-to-business and business-to-consumer perspective:
o interactive marketing and advertising solutions;
o enabling tools and infrastructure technologies;
o content and community; and
o e-commerce.
We believe that our network of over 75 operating and venture companies
benefit from CMGI's operational expertise, strategic guidance and
resources. They also benefit from the exchange of experiences and best
practices with each other. We foster a collaborative environment that
encourages a sharing of ideas among our companies. We also facilitate
intra- network relationships and seek to leverage our strategic partners to
accelerate the growth of our network companies. We believe that our network
of companies provides us with insights into emerging market needs and
position us to continue to be a driving force behind the evolution of the
Internet.
Our principal executive office is located at 100 Brickstone Square,
Andover, Massachusetts 01810 and our telephone number is (978) 684-3600.
References in this prospectus supplement to our Web site address or
those of our network companies are textual references only. The information
contained on these Web sites is not a part of this prospectus supplement.
CMGI, CMGI Solutions, CMGion, @Ventures, CMGI Creating Net Value,
Creating Net Value and Worldwide Points are our servicemarks or those of
our subsidiaries. This prospectus supplement also contains other
trademarks, servicemarks and trade names that are the property of our
network companies or other parties.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of
common stock being sold by the selling stockholders pursuant to this
prospectus supplement. The selling stockholders will receive all of the net
proceeds from any sale of the shares of common stock being sold by the
selling stockholders pursuant to this prospectus supplement.
The selling stockholders will pay any underwriting discounts and
commissions and expenses incurred by the selling stockholders for
brokerage, accounting, tax or legal services or any other expenses incurred
by the selling stockholders in disposing of the shares. We will bear all
other costs, fees and expenses incurred in effecting the registration of
the shares covered by this prospectus supplement, including, without
limitation, all registration and filing fees, Nasdaq listing fees and fees
and expenses of our counsel and our accountants.
THE SELLING STOCKHOLDERS
The consideration paid to the former stockholders of Tallan, Inc. for
our purchase of a controlling interest in Tallan, Inc. on March 31, 2000
included three promissory notes. One note, in the principal amount of
$241,794,649.00, matures on September 30, 2000 and two notes, in the
aggregate principal amount of $135,101,879.00, mature on December 31, 2000.
We have the option, on or before maturity of the notes, of paying some or
all of the principal and interest owed on the notes in our common stock. We
put these notes in escrow on behalf of the former Tallan, Inc.
stockholders, pending payment on or before maturity of the notes and, in
the case of one of the notes maturing on December 31, 2000 in the principal
amount of $50,000,000.00, the resolution of indemnification claims, if any.
This prospectus supplement relates to the offer and resale by the former
stockholders of Tallan, Inc. of the shares of our common stock that we will
issue upon payment of the promissory note maturing on September
30, 2000.
The following table sets forth, to our knowledge, the name and number
of shares of our common stock beneficially owned by each of the selling
stockholders offering shares described by this prospectus supplement.
Beneficial ownership is determined in accordance with the rules of the SEC,
and includes voting or investment power with respect to shares. Shares of
common stock issuable under stock options that are exercisable within 60
days after September 26, 2000 are deemed outstanding for computing the8
percentage ownership of the person holding the options but are not deemed
outstanding for computing the percentage ownership of any other person.
Unless otherwise indicated below, to our knowledge, all persons named in
the table have sole voting and investment power with respect to their
shares of common stock, except to the extent authority is shared by spouses
under applicable law. The inclusion of any shares in this table does not
constitute an admission of beneficial ownership for the person named below.
The table has been prepared on the basis of the information furnished to us
by or on behalf of the selling stockholders. As of September 26, 2000 there
were approximately 310,963,694 shares of CMGI common stock outstanding.
SHARES OF
SHARES OF NUMBER OF COMMON STOCK
COMMON STOCK SHARES TO BE BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER THE
SELLING STOCKHOLDERS THIS OFFERING(2) OFFERED (1) OFFERING(2)
-------------------- ---------------- ----------- -----------
Number Percent Number Percent
------ ------- ------ -------
Abel, Mary 0 * 112,674 0 *
Bourdon, Peter (3) 70,372 * 115,212 70,372 *
Clune, Stephen (3) 63,886 * 115,212 63,886 *
Dearing, Christopher (3) 0 * 1,158,432 0 *
Filippelli, Philip (3) 33,130 * 5,292 33,130 *
Hughes, Gregory 0 * 422,856 0 *
Hughes, John (3) 0 * 1,568,164 0 *
Hughes, Michael (3) 0 * 1,676,706 0 *
Hughes, Robert (3) 10,655 * 219,838 10,655 *
Lidestri, Bernard (3) 58,491 * 88,820 58,491 *
Logan, Michael (3) 54,943 * 88,820 54,943 *
Lydon, Michael (3) 42,233 * 115,212 42,233 *
McKeown, Eugene (3) 1,100 * 193,084 1,100 *
Paternoster, Laurie (3) 0 * 670,537 0 *
Christopher Reeve Paralysis
Foundation 0 * 378,410 0 *
Rivard, Douglas (3) 55,185 * 90,052 55,185 *
St. Jean, Gary (3) 51,948 * 27,262 51,948 *
Tanacea, David (3) 65,996 * 115,212 65,996 *
Williamson, Kevin (3) 28,460 * 88,820 28,460 *
* Less than 1%
(1) We do not know when or in what amounts a selling stockholder may
offer shares for sale. The selling stockholders may sell any or all
of the shares offered by this prospectus supplement. Because the
selling stockholders may offer all or some of the shares pursuant to
this offering, we cannot estimate the number of the shares that will
be held by the selling stockholders after completion of the offering.
The common stock being registered is subject to a Trading Day Limit
Agreement which restricts the amount of shares any selling
stockholder can sell in one day and which provides a limited time
window in which the selling stockholder can enter into an arrangement
that transfers to another any of the consequences of ownership of
those shares. For purposes of this table, we have assumed that, after
completion of the offering, none of the shares covered by this
prospectus supplement will be held by the selling stockholders.
(2) These columns do not reflect ownership of shares of CMGI Common Stock
that may be issued in payment of two remaining promissory notes, both
maturing on December 31, 2000. If and when these shares are issued,
an additional prospectus supplement will be filed.
(3) Except for those individuals designated by reference to this
footnote, none of the selling stockholders has held any position or
office with, or has otherwise had a material relationship with, us,
Tallan, Inc., and/or any of our other subsidiaries within the past
three years.
PLAN OF DISTRIBUTION
The consideration paid to the former stockholders of Tallan, Inc. for
our purchase of a controlling interest in Tallan, Inc. on March 31, 2000
included three promissory notes. One note, in the principal amount of
$241,794,649.00, matures on September 30, 2000 and two notes, in the
aggregate principal amount of $135,101,879.00, mature on December 31, 2000.
We have the option, on or before the maturity of the notes, of paying some
or all of the principal and interest owed on the notes in our common stock.
We put these notes in escrow on behalf of the former Tallan, Inc.
stockholders, pending payment on or before maturity and, in the case of one
of the notes maturing on December 31, 2000 in the principal amount of
$50,000,000.00, the resolution of indemnification claims, if any. Upon
payment of the note maturing on December 31, 2000 in the principal amount
of $50,000,000.00, shares of our common stock equal in value to any
indemnification claims then pending will remain in escrow until those
claims are resolved. Additionally, common stock issued in payment of all
three notes is subject to a Trading Day Limit Agreement between us and the
selling stockholders. Under this agreement, the selling stockholder can, on
any single day on which Nasdaq is open for trading, sell only up to 10% of
the total shares issued to the selling stockholder upon payment of any of
the notes. In addition, the selling stockholder can, beginning on the date
on which the selling stockholder is issued shares upon payment of any of
the notes and ending ten trading days thereafter, enter into a swap, hedge,
collar, short sale or other arrangement that transfers to another any of
the consequences of ownership of those shares for that period. This
prospectus supplement relates to the offer and resale by the former
stockholders of Tallan, Inc. of the shares of our common stock that we will
issue upon payment of the promissory note maturing on September 30, 2000.
For purposes hereof, the term "selling stockholders" includes donees,
pledgees, distributees, transferees or other successors-in-interest,
including, without limitation, their respective affiliates and limited or
general partners, all of which are referred to as a group below as
transferees, or certain counterparties to derivatives transactions with the
selling stockholders or transferees. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner
and size of each sale.
The selling stockholders may sell the shares offered hereby from time
to time, subject to the Trading Day Limit Agreement, in one or more
transactions (which may involve block transactions) on Nasdaq or on any
other market on which our common stock may from time to time be trading, in
privately-negotiated transactions, through the writing of options on the
shares, short sales or any combination thereof. The sale price to the
public may be the market price for our common stock prevailing at the time
of sale, a price related to such prevailing market price, at negotiated
prices or such other price as the selling stockholders determine from time
to time. The selling stockholders will have the sole discretion not to
accept any purchase offer or make any sale of shares if they deem the
purchase price to be unsatisfactory at any particular time.
The selling stockholders may also sell the shares, subject to the
Trading Day Limit Agreement, directly to market makers acting as principals
and/or broker-dealers acting as agents for themselves or their customers.
Such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). Market makers
and block purchasers purchasing the shares will do so for their own account
and at their own risk. It is possible that a selling stockholder will
attempt to sell shares of common stock in block transactions to market
makers or other purchasers at a price per share which may be below the then
market price. There can be no assurance that all or any part of the shares
offered hereby will be issued to, or sold by, the selling stockholders. The
selling stockholders and any brokers, dealers, or agents, upon effecting
the sale of any of the shares offered hereby, may be deemed "underwriters"
as that term is defined under the Securities Act or the Exchange Act, or
the rules and regulations thereunder.
The selling stockholders may enter into hedging transactions with
broker-dealers with respect to the shares in accordance with the terms of
the Trading Day Limit Agreement. In connection with these transactions,
broker- dealers may engage in short sales of the shares in the course of
hedging the positions they assume with the selling stockholders. The
selling stockholders may also sell the shares short and redeliver the
shares to close out the short positions. The selling stockholders may also
enter into option or other transactions with broker-dealers which require
the delivery to the broker-dealer of the shares. The selling stockholders
may also loan or pledge the shares to a financial institution or a
broker-dealer and the financial institution or the broker-dealer may sell
the shares loaned or upon a default the financial institution or the
broker-dealer may effect sales of the pledged shares.
The selling stockholders, alternatively, may sell all or any part of
the shares, subject to the Trading Day Limit Agreement, offered hereby
through an underwriter. No selling stockholder has entered into any
agreement with a prospective underwriter and there is no assurance that any
such agreement will be entered into. If a selling stockholder enters into
such an agreement or agreements, the relevant details will be set forth in
an additional prospectus supplement.
To the extent required, we will file with the SEC additional
prospectus supplements to disclose material arrangements regarding the plan
of distribution.
To comply with the securities laws of certain jurisdictions, the
shares offered by this prospectus supplement may need to be offered or sold
in such jurisdictions only through registered or licensed brokers or
dealers.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, any person engaged in a distribution of the shares of common
stock covered by this prospectus supplement may be limited in their ability
to engage in market activities with respect to such shares. The selling
stockholders, for example, will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations under it,
including, without limitation, Regulation M, which provisions may restrict
certain activities of the selling stockholders and limit the timing of
purchases and sales of any shares of common stock by the selling
stockholder. Furthermore, under Regulation M, persons engaged in a
distribution of securities are prohibited from simultaneously engaging in
market making and certain other activities with respect to such securities
for a specified period of time prior to the commencement of such
distributions, subject to specified exceptions or exemptions. The foregoing
may affect the marketability of the shares offered by this prospectus
supplement.
We have agreed to pay certain expenses of the offering and issuance
of the shares covered by this prospectus supplement, including the
printing, legal and accounting expenses we incur and the registration and
filing fees imposed by the SEC or Nasdaq. We will not pay brokerage
commissions or taxes associated with sales by the selling stockholders.
We will not terminate the Registration Statement of which this
prospectus supplement constitutes a part prior to March 31, 2001, except in
the event that all of the shares covered by this prospectus supplement have
been disposed of pursuant to and in accordance with the Registration
Statement.
LEGAL MATTERS
The validity of the issuance of the common stock covered by this
prospectus supplement will be passed upon for CMGI by Skadden, Arps, Slate,
Meagher & Flom LLP, Boston, Massachusetts, counsel for CMGI in this
transaction.
EXPERTS
Our consolidated financial statements as of July 31, 1999 and 1998,
and for each of the years in the three-year period ended July 31, 1999 have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon authority of said
firm as experts in accounting and auditing.
The financial statements of Flycast Communications Corporation as of
December 31, 1999 and for the year then ended, have been incorporated by
reference herein and in the registration statement in reliance on the
report of KPMG LLP, independent certified public accountants, incorporated
by reference herein, and upon authority of said firm as experts in
accounting and auditing.
The financial statements of AdForce, Inc. as of December 31, 1999 and
for the year then ended, have been incorporated by reference herein and in
the registration statement in reliance on the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein,
and upon authority of said firm as experts in accounting and auditing.
The financial statements of AltaVista Company as of December 31, 1997
and 1998 and for each of the two years in the period ended December 31,
1997, and for the period from January 1, 1998 through June 11, 1998 and for
the period from June 12, 1998 through December 31, 1998, the financial
statements of Zip2 as of December 31, 1997 and 1998, and for each of the
three years in the period ended December 31, 1998, and the financial
statements of Shopping.com as of January 31, 1998 and 1999 and for each of
the two years in the period ended January 31, 1999, incorporated in this
prospectus by reference to the CMGI, Inc. Current Report on Form 8-K dated
June 29, 1999 have been so incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given upon the
authority of said firm as experts in auditing and accounting. The financial
statements of Shopping.com as of the year ended January 31, 1997, have been
incorporated by reference herein in reliance upon the report of Singer
Lewak Greenbaum & Goldstein LLP, independent certified public accountants,
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Flycast Communications
Corporation as of December 31, 1997 and 1998 and for each of the years in
the three-year period ended December 31, 1998, incorporated by reference
herein, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report which is incorporated by reference, and have been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated balance sheets of yesmail as of December 31, 1998
and 1999, and the related consolidated statements of operations,
stockholders' (deficit) equity and cash flows for each of the years in the
two-year period ended December 31, 1999, have been incorporated by
reference herein and have been audited by Arthur Andersen LLP, independent
certified public accountants, as indicated in their reports with respect
thereto, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said report.
The financial statements of Tallan, Inc. as of December 31, 1998 and
1999 and for each of the three years in the period ended December 31, 1999
incorporated in this prospectus by reference to the CMGI, Inc. Current
Report on Form 8-K dated March 9, 2000 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given upon the authority of said firm as experts in auditing
and accounting.
Ernst & Young LLP, independent auditors, have audited the
consolidated financial statements of AdForce, Inc. at December 31, 1997 and
1998, for the years ended December 31, 1998 and 1997 and for the period
from January 16, 1996 (inception) to December 31, 1996 (not presented
separately herein), as set forth in their report, which is included as an
exhibit to the prospectus and registration statement filed on September 11,
2000. AdForce's financial statements are included therein as an exhibit in
reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the financial
statements of uBid, Inc. at December 31, 1998 and 1999 and for the period
from April 1, 1997 (inception) to December 31, 1997 and for the years ended
December 31, 1998 and 1999, included in the Amendment No. 1 to the CMGI,
Inc. Registration Statement on Form S-4 filed on March 27, 2000, as set
forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. The financial
statements are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements,
information statements and other information with the Commission. You can
inspect and copy any such information we file with the Commission at the
public reference facilities the Commission maintains at:
Room 1024, Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
and at the SEC's Regional Offices located at:
Suite 1400, Northwestern Atrium Center
500 West Madison Street
Chicago, Illinois 60661
and
13th Floor, Seven World Trade Center
New York, New York 10048
and you may also obtain copies of such material by mail, at prescribed
rates, from the Public Reference Section of the Commission at:
450 Fifth Street, N.W.
Washington, D.C. 20549
Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms.
The Commission also maintains a Web site on the World Wide Web, the
address of which is http://www.sec.gov. That site also contains our annual,
quarterly and special reports, proxy statements, information statements and
other information.
This prospectus supplement is part of a registration statement filed
by us with the Commission. It does not contain all the information included
or incorporated by reference in the registration statement. The full
registration statement can be obtained from the Commission as indicated
above or from us.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" information
from other documents that we file with them, which means that we can
disclose important information to you by referring to those documents. The
information incorporated by reference is considered to be a part of this
prospectus supplement, and information that we file later with the
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings
we make with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the sale of all the shares of common stock covered by
this prospectus supplement:
o Annual Report on Form 10-K for the fiscal year ended July 31,
1999, filed with the Commission on October 29, 1999;
o Quarterly Report on Form 10-Q for the fiscal quarter ended
October 31, 1999, filed with the Commission on December 15, 1999;
o Quarterly Report on Form 10-Q for the fiscal quarter ended
January 31, 2000, filed with the Commission on March 16, 2000;
o Quarterly Report on Form 10-Q for the fiscal quarter ended April
30, 2000, filed with the Commission on June 14, 2000, as amended
by the Quarterly Report on Form 10-Q/A filed with the Commission
on July 11, 2000;
o Current Report on Form 8-K (June 29, 1999) filed with the
Commission on August 12, 1999;
o Current Report on Form 8-K (August 18, 1999) filed with the
Commission on September 2, 1999, as amended by the Current
Reports on Form 8-K/A (August 18, 1999) filed with the Commission
on November 1, 1999 and November 17, 1999;
o Current Report on Form 8-K (September 3, 1999) filed with the
Commission on September 3, 1999;
o Current Report on Form 8-K (September 20, 1999) filed with the
Commission on September 27, 1999;
o Current Report on Form 8-K (September 23, 1999) filed with the
Commission on October 1, 1999; and
o Current Report on Form 8-K (December 15, 1999) filed with the
Commission on December 17, 1999;
o Current Report on Form 8-K (December 17, 1999) filed with the
Commission on December 17, 1999
o Current Report on Form 8-K (January 12, 2000) filed with the
Commission on January 24, 2000;
o Current Report on Form 8-K (February 9, 2000) filed with the
Commission on February 22, 2000;
o Current Report on Form 8-K (February 14, 2000) filed with the
Commission on March 3, 2000;
o Current Report on Form 8-K (March 9, 2000) filed with the
Commission on March 9, 2000;
o Current Report on Form 8-K (March 9, 2000) filed with the
Commission on March 10, 2000;
o Current Report on Form 8-K (April 28, 2000) filed with the
Commission on May 10, 2000;
o Current Report on Form 8-K (March 10, 2000) filed with the
Commission on May 25, 2000;
o Current Report on Form 8-K (August 16, 2000) filed with the
Commission on August 17, 2000;
o Current Report on Form 8-K (August 18, 2000) filed with the
Commission on August 18, 2000;
o All of our filings pursuant to the Exchange Act after the date of
filing the initial registration statement and prior to
effectiveness of the registration statement; and
o The description of our common stock contained in our registration
statement on Form 8-A, filed with the Commission on January 11,
1994 (File No. 000-23262).
You may request a copy of these filings, at no cost, by writing or
telephoning us using the following contact information:
Director, Investor Relations
CMGI, Inc.
100 Brickstone Square
Andover, MA 01810
(978) 684-3600
You should rely only on the information incorporated by reference,
provided in this prospectus supplement or the prospectus dated September
11, 2000. We have not authorized anyone else to provide you with different
information. You should not assume that the information in this prospectus
supplement or the prospectus dated September 11, 2000 is accurate as of any
date other than the date on the front of those documents. However, you
should realize that the affairs of CMGI may have changed since the date of
this prospectus supplement. This prospectus supplement will not reflect
such changes. You should not consider this prospectus supplement to be an
offer or solicitation relating to the securities in any jurisdiction in
which such an offer or solicitation relating to the securities is not
authorized. Furthermore, you should not consider this prospectus supplement
to be an offer or solicitation relating to the securities if the person
making the offer or solicitation is not qualified to do so, or if it is
unlawful for you to receive such an offer or solicitation.
