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As Filed with the Securities and Exchange Commission on April 17, 1998
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CKS GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 77-0385435
(State or other jurisdiction of (I.R.S. Employer
incorporation organization) Identification Number)
10441 Bandley Drive
Cupertino, California 95014
(408) 366-5100
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
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MARK D. KVAMME
Chief Executive Officer
CKS GROUP, INC.
10441 Bandley Drive
Cupertino, California 95014
(408) 366-5100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
BARRY E. TAYLOR, ESQ.
DANIEL R. MITZ, ESQ.
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
==========================================================================================================
Proposed
Maximum
Title of Proposed Maximum Aggregate
Securities to Amount to be Offering Price Per Offering Amount of
be Registered Registered Share (1) Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value 37,325 $21.50 $802,488 $243
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(1) Estimated solely for the purpose of computing the registration fee, based
on the closing price of the Common Stock as reported on the Nasdaq
National Market on April 13, 1998 in accordance with Rule 457 under the
Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to the registration or qualification under the securities laws of any such
State.
Subject to Completion April 17, 1998
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PROSPECTUS
37,325 SHARES
CKS GROUP, INC.
--------------------
COMMON STOCK
($0.001 PAR VALUE)
-------------------------------------------
This Prospectus relates to the public offering, which is not being
underwritten, of shares of the common stock ("Common Stock") of CKS Group, Inc.,
a Delaware corporation (together with its consolidated subsidiaries, "CKS" or
the "Company") offered from time to time by the Selling Stockholders named
herein (the "Selling Stockholders") for their own benefit. It is anticipated
that the Selling Stockholders will generally offer shares of Common Stock for
sale at prevailing prices in the over-the-counter market on the date of sale.
The Company will receive no part of the proceeds of sales made hereunder. None
of the shares offered pursuant to this Prospectus have been registered prior to
the filing of the Registration Statement of which this Prospectus is a part.
The Common Stock of the Company is traded on the Nasdaq National
Market (Nasdaq Symbol: CKSG). On ________, 1998, the closing price of the
Company's Common Stock was $_______ .
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
The Selling Stockholders and any broker executing selling orders on
behalf of the Selling Stockholders may be deemed to be an "underwriter" within
the meaning of the Securities Act. Commissions received by any such broker may
be deemed to be underwriting commissions under the Securities Act.
-------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------------------
The date of this Prospectus is __________ __, 1998.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Prospectus is delivered, upon written or oral
request of any such person, a copy of any and all of the information that has
been or may be incorporated by reference in this Prospectus, other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such copies should be directed to
CKS Group, Inc., 10441 Bandley Drive, Cupertino, CA 95014, Attn.:
Investor Relations (telephone (408) 366-5100).
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at Seven World Trade Center,
13th Floor, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Common Stock of the Company is quoted on
the Nasdaq National Market. Reports, proxy and information statements and other
information concerning the Company may be inspected at The Nasdaq Stock Market
at 1735 K Street, N.W., Washington, D.C. 20006. Information, as of particular
dates, concerning directors and officers of the Company, their remuneration,
options granted to them, and the principal holders of securities of the Company
has been disclosed in the proxy statements distributed to shareholders of the
Company and filed with the Commission. The Commission maintains a World Wide Web
site that contains reports, proxy and information statements and other
information filed with the Commission. The address of the Site is
http://www.sec.gov.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the shares of Common Stock offered hereby, reference
is hereby made to the Registration Statement. Statements contained herein
concerning the provisions of any document are not necessarily complete, and each
such statement is qualified in its entirety by reference to the copy of such
document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference in this Prospectus: (i) the Company's Annual
Report on Form 10-K for the year ended November 30, 1997, filed pursuant to
Section 13 of the Exchange Act; (ii) the Company's Quarterly Report on Form 10-Q
for the quarter ended March 1, 1998, filed pursuant to Section 13 of the
Exchange Act; and (iii) the description of the Company's
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Common Stock contained in its Registration Statement on Form 8-A as filed with
the Commission on November 30, 1995.
All reports and other documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement incorporated herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY
CKS Group, Inc. ("CKS" or the "Company") is an international
integrated marketing services and technology company headquartered in Cupertino,
California. The Company specializes in offering a wide range of integrated
marketing communication services and technology solutions that help companies
market their products, services and messages. The integrated marketing
communication services CKS provides include strategic corporate and product
positioning, corporate identity and product branding, new media, systems
integration, environmental design, packaging, electronic commerce, collateral
systems, advertising, direct marketing, consumer promotions, trade promotions
and media placement services. Depending on the scope of the assignment, the
Company's services to its clients range from execution of a discrete marketing
project, such as designing product packaging, to taking responsibility for the
overall marketing message through various methods. When the Company assumes
responsibility for the overall marketing message, the Company works with the
client to analyze the client's products or services, and the market for those
services, and to evaluate the appropriate media to reach the desired market
efficiently.
The Company is a provider of integrated marketing programs that
utilize advanced technology solutions and new media -- which the Company defines
as media that deliver content to end users in digital form, including the World
Wide Web, the Internet, proprietary online services, CD-ROMs, laptop PC
presentations and interactive kiosks.
The Company was incorporated in California in 1994 and is the
successor to three predecessor corporations, CKS Partners, Inc., CKS Pictures,
Inc. and CKS Interactive, Inc., which are now wholly owned subsidiaries of the
Company. CKS Partners, Inc. originally began business in 1987 with two employees
as Cleary Communications. CKS Pictures, Inc. and CKS Interactive, Inc. were
incorporated in 1994 and merged into CKS Partners, Inc. in 1998. Company was
reincorporated in Delaware in December 1995. The Company acquired
Schell/Mullaney, Inc. ("Schell/Mullaney") in August 1996; Donovan & Green, Inc.
("Donovan & Green") in January 1997; McKinney & Silver ("M&S") in January 1997;
CKS Holding Deutschland GmbH (formerly EPG Elektronische Publikationen GmbH)
("CKS GmbH") in March 1997; Gormley & Partners, Inc. ("Gormley & Partners") in
March 1997; and SiteSpecific, Inc. ("SiteSpecific") in June 1997. The Company's
executive offices are located at 10441 Bandley Drive, Cupertino, California
95014. Its telephone number at that address is (408) 366-5100.
References made in this Prospectus to "CKS," the "Company" or the
"Registrant" refer to CKS Group, Inc. and its wholly owned subsidiaries.
CKS|Group(TM), CKS|Interactive(TM), CKS|Onsite(TM), CKS|Partners(TM) and
CKS|Pictures(TM) are the trademarks of CKS Group, Inc., which may be registered
in some jurisdictions. All other trademarks used are owned by their respective
owners.
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RISK FACTORS
In addition to reviewing other information in this Prospectus and the
Company's 1997 Annual Report on Form 10-K and the other documents incorporated
herein by reference (the "Incorporated Documents"), the following factors should
be considered carefully in evaluating the Company and its business before
purchasing the shares of Common Stock offered by this Prospectus. Statements in
this "Risk Factors" section regarding expectations or future events and certain
sections of the Incorporated Documents (identified with more particularity in
such Incorporated Documents) may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Actual results could
differ materially from those projected in such forward-looking statements as a
result of the factors set forth below and elsewhere in this document and the
Incorporated Documents.
FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK
CKS operates in a rapidly changing environment that involves a number
of uncertainties, some of which are beyond the Company's control. In addition to
the uncertainties described elsewhere in this report, these uncertainties
include:
Dependence on Key Accounts. The Company's five largest clients
accounted for 37% and 39% of the Company's revenues for the fiscal years ended
November 30, 1997 and November 30, 1996, respectively, with fluctuations in the
amount of revenue contribution from each such client from quarter to quarter.
Audi of America, Inc. and Computer Associates International, Inc., the Company's
two largest clients during the fiscal year ended November 30, 1997, accounted
for approximately 15% and 7% of the Company's revenues, respectively, during the
period. Since many of the Company's clients generally retain the Company on a
project by project basis, a client from whom the Company generates substantial
revenue in one period may not be a substantial source of revenue in a subsequent
period. For example, of the five largest clients (in terms of fees paid to the
Company) during the fiscal year ended November 30, 1997, only two were in the
top five for the fiscal year ended November 30, 1996. To the extent that any of
the Company's major clients does not remain a significant source of revenues,
there could be a direct and immediate material adverse effect on the Company's
business, financial condition and operating results. For instance, one of the
Company's major clients, Barnett Bank, was acquired during the fourth quarter of
1997 and, as a result, substantially reduced its level of spending with the
Company. This reduction in spending contributed to a significant decline in the
Company's earnings during that quarter. Historically, the Company's typical
project has lasted only four to six weeks, and once a project is completed there
can be no assurance that a client will engage the Company for further services.
In addition, the Company's clients may unilaterally reduce their use of the
Company's services or terminate existing projects without penalty. The
termination of the Company's business relationship with any of its significant
clients or a material reduction in the use of the Company's services by a
significant client would have a material adverse effect on the Company's
business, financial condition and operating results.
Fluctuations in Quarterly Operating Results and Margins; Seasonality
of Business. The Company's operating results have fluctuated in the past and may
fluctuate in the future as a result of a variety of factors. Some of these
factors include timing of the completion, material reduction or cancellation of
major projects or the loss of a major client, timing of the receipt of new
business, timing of the hiring or loss of personnel, timing of the opening or
closing of an office, the relative mix of high margin creative projects as
compared to lower margin production projects, changes in the pricing strategies
and business model of the Company or its competitors, capital expenditures and
other costs relating to the expansion of operations, and other factors that are
outside of the Company's control. For instance, reductions in marketing
expenditures by several of the Company's largest clients resulted in a
significant decline in the Company's earnings for the fourth quarter of fiscal
1997, which in turn resulted in a 63% decline in the market price of the
Company's Common Stock in a single day. Operating results could also be
materially adversely affected by increased competition in the Company's markets.
The Company's
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operating margins may fluctuate from quarter to quarter depending on the
relative mix of lower cost full time employees versus higher cost independent
contractors. The Company experiences some seasonality in its business which
results from timing of product introductions and business cycles of the
Company's clients. During the fourth quarter of 1997, for example, the Company's
largest client, Audi of America, significantly reduced its marketing spending
after completing a major product launch. The Company's revenues for the first
fiscal quarter tend to be somewhat lower than for the preceding fourth quarter
because many clients have expended most of their marketing budgets prior to the
end of the calendar year and do not release funds from the next calendar year's
marketing budget until mid to late January. The Company expects this seasonality
to continue in the future. As a result of the foregoing and other factors, the
Company anticipates that it may experience material and adverse fluctuations in
future operating results on a quarterly or annual basis. Therefore, the Company
believes that period to period comparisons of its revenues and operating results
are not necessarily meaningful and that such comparisons cannot be relied upon
as indicators of future performance.
Developing Market for New Media; New Entrants; Unproven Acceptance of
the Company's New Media Solutions. The Company's future growth is dependent to a
significant extent upon its ability to increase the amount of revenue it derives
from providing marketing and advertising solutions to its customers through new
media, which the Company defines as media that delivers content to end users in
digital form, including the World Wide Web, the Internet, proprietary online
services, CD-ROMs, laptop PC presentations and interactive kiosks. The market
for marketing and advertising through new media is rapidly evolving and is
characterized by an increasing number of market entrants who have introduced or
developed products and services for communication and commerce through new
media. Demand and market acceptance for recently introduced products and
services are subject to a high level of uncertainty. There can be no assurance
that commerce and communication through new media will continue to grow. The
Company believes that its focus on and expertise in new media-based marketing
services has been an important factor in attracting new clients. To the extent
that the Company's leadership in providing new media solutions erodes as
established advertising agencies and other competitors expand their new media
capabilities, the Company's competitive position and operating results may be
materially adversely affected.
Risks Associated with Expansion. The Company's business has grown
rapidly in recent periods through expansion of its existing operations and
through acquisition of other marketing communication services providers. The
Company may continue to expand its business and customer base by acquiring
complementary businesses, opening new offices or expanding its offerings of
marketing communications products or services. There can be no assurance that
the Company will be able to operate profitably in any new geographic location,
that it will be successful in identifying new services or products that will be
attractive to clients or that it will ultimately generate revenues in excess of
costs of implementing them. Expansion of the Company's operations would result
in increased responsibility for both existing and new management personnel and
strain on the Company's existing operational, financial and management
information systems. The Company's success depends to a significant extent on
the ability of its executive officers and other members of senior management to
operate effectively, both independently and as a group. No assurance can be
given that existing and new members of the Company's management will succeed in
their roles, or that the Company can efficiently allocate management
responsibilities and cause its officers and senior managers to operate
effectively as a group. Difficulties in recruiting and assimilating new
personnel, enhancing the Company's financial and operational controls and
expanding the Company's marketing and customer support capabilities may impede
the Company's ability to pursue its growth strategy. In general, there can be no
assurance that the Company will be able to manage its recent or any future
expansions effectively, and any inability to do so would have a material adverse
effect on the Company's business, financial condition and operating results.
Risks Associated with Acquisitions. As part of its business strategy,
the Company has made and expects to make acquisitions of, or significant
investments in, businesses that offer complementary marketing communication
services, products and technologies. During fiscal 1997, the Company completed
acquisitions of five businesses. The Company's past and any future acquisitions
or investments are and will be accompanied by
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the risks commonly encountered in acquisitions of businesses. Such risks
include, among other things, the difficulty of assimilating the operations and
personnel of the acquired businesses, the potential disruption of the Company's
ongoing business, the inability of management to maximize the financial and
strategic position of the Company through the successful incorporation of
acquired personnel and clients, the maintenance of uniform standards, controls,
procedures and policies and the impairment of relationships with employees and
clients as a result of any integration of new management personnel. The future
performance of businesses acquired by the Company and which may be acquired by
the Company in the future is often highly dependent on the continued employment
and the performance of one or more key officers or employees of such businesses.
To the extent that such key officers or employees terminate their employment
with the Company, or fail to operate effectively, either independently or
together with other officers and personnel of the Company, the Company's
business, financial condition and operating results may be materially adversely
affected.
The Company regularly engages in discussions relating to potential
acquisitions. The Company expects that future acquisitions, if any, could
provide for consideration to be paid in cash, stock or a combination of cash and
stock. The number of shares which may be issued in future acquisitions will
depend on the market price of the Company's Common Stock and a variety of other
factors and, as a result, future acquisitions may have a significant dilutive
impact on the Company's existing stockholders. Any acquisitions accounted for as
purchase business combinations may increase the amount of goodwill recorded as
an asset on the Company's balance sheet and accordingly may increase the amount
of goodwill that must be amortized against operating results in the future. In
addition, the Company periodically reviews the goodwill related to its
acquisitions. If the Company were to determine that the goodwill associated with
one or more of its acquisitions were to become impaired, the Company would be
required to record the extent of such impairment as an expense in its statement
of operations for the period in which such impairment occurred. No assurance can
be given that any potential acquisition will be consummated. There can also be
no assurance that the Company's prior acquisitions or any other potential
acquisitions will not have a material adverse effect on the Company's business,
financial condition and operating results.
Competition. The markets for the Company's services are highly
competitive and are characterized by pressures to reduce prices, incorporate new
capabilities and accelerate job completion schedules. The Company faces
competition from a number of sources. These sources include national and
regional advertising agencies as well as specialized and integrated marketing
communication firms. In addition, with respect to new media, many national
advertising agencies have internally developed or acquired new media
capabilities. New competitors that either provide integrated or specialized
services (e.g., corporate identity and packaging, advertising services or World
Wide Web site design) or are technologically proficient, especially in the new
media arena, have emerged and are competing with the Company. Many of the
Company's competitors or potential competitors have longer operating histories,
longer client relationships and significantly greater financial, management,
technology, development, sales, marketing and other resources than the Company.
In addition, the Company's ability to maintain its existing client relationships
and generate new clients depends, to a significant degree, on the quality of its
services and its reputation among its clients and potential clients, compared
with the quality of services provided by, and the reputations of, the Company's
competitors. To the extent the Company loses clients to the Company's
competitors because of dissatisfaction with the Company's services or the
Company's reputation is adversely impacted for any other reason, the Company's
business, financial condition and operating results could be materially
adversely affected.
There are relatively low barriers to entry into the Company's
business. The Company has no significant proprietary technology that would
preclude or inhibit competitors from entering the integrated marketing
communication solutions market. The Company expects that it will face additional
competition from new entrants into the market in the future. There can be no
assurance that existing or future competitors will not develop or offer
marketing communication services and products that provide significant
performance, price, creative or other advantages over those offered by the
Company, which could have a material adverse effect on the Company's
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business, financial condition and operating results.
Project Profit Exposures. The Company generates a significant portion
of its revenues through project fees on a fixed fee for service basis. The
Company assumes greater financial risk on fixed-price type contracts than on
either time-and-material or cost-reimbursable contracts. Failure to anticipate
technical problems, estimate costs accurately or control costs during
performance of a fixed-price contract may reduce the Company's profit or cause
the Company to incur a loss. Although many of the Company's projects last four
to six weeks and therefore each individual short-term project creates less
exposure than a long-term fixed-price contract, in the event the Company does
not accurately anticipate the progress of a number of significant
revenue-generating projects, a material adverse effect on the Company's
business, financial condition and operating results could result.
Conflicts of Interest. Conflicts of interest are inherent in certain
segments of the marketing communications industry, particularly in advertising.
The Company has in the past, and likely will in the future, be unable to pursue
potential advertising and other opportunities because such opportunities will
require the Company to provide services to direct competitors of existing
Company clients. In addition, the Company risks alienating or straining
relationships with existing clients each time the Company agrees to provide
services to even indirect competitors of existing Company clients. Conflicts of
interest may jeopardize the stability of revenues generated from existing
clients and preclude access to business prospects, either of which developments
could have a material adverse effect on the Company's business, financial
condition and operating results.
Market Acceptance of the Company's Approach; Service Development;
Rapid Technological Change. The Company provides an integrated approach to meet
the marketing communications needs of its clients. To compete successfully
against specialized service providers, the Company believes that its products
and services in each marketing communication discipline will need to be
competitive with the services offered by the firms that specialize in each
discipline. There can be no assurance that the Company will be successful in
providing competitive solutions to clients in each of its integrated marketing
communication services and products. Failure to do so could result in the loss
of existing customers or the inability to attract and retain new customers,
either of which developments could have a material adverse effect on the
Company's business, financial condition and operating results.
Susceptibility to General Economic Conditions. The Company's revenues
and results of operations are subject to fluctuations based upon general
economic conditions. If there were to be a general economic downturn or a
recession in the United States, then the Company expects that business
enterprises, including its clients and potential clients, likely will
substantially and immediately reduce their advertising and marketing budgets.
Because certain of the Company's largest clients have substantial overseas
operations, their advertising and marketing budgets may also be adversely
affected by economic conditions in overseas markets, including the recent
volatility in Asian currency markets. In the event of such an economic downturn,
there can be no assurance that the Company's business, financial condition and
operating results would not be materially and adversely affected.
Year 2000 Compliance. Many currently installed computer systems and
software products are coded to accept only two-digit entries in the date code
field. Beginning in the year 2000, these date code fields will need to accept
four-digit entries to distinguish 21st century dates from 20th century dates. As
a result, in approximately two years, computer systems and/or software used by
many companies may need to be upgraded to comply with such "Year 2000"
requirements. Significant uncertainty exists concerning the potential effects
associated with compliance. Although the Company believes that it will be Year
2000 compliant, there can be no assurance that coding errors or other defects
will not be discovered in the future. Any Year 2000 compliance problem of the
Company, its customers or the internet infrastructure could result in a material
adverse effect on the Company's business, financial conditions and operating
results.
Volatility of Stock Price. The trading price of the Company's Common
Stock has been and in the future is expected to be subject to extreme
fluctuations in response to both business-related issues, such as
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quarterly variations in operating results, the timing of commencement or
completion of client projects, reductions or increases in client spending on
marketing communications services, announcements of new services or business
acquisitions by the Company or its competitors, and the gain or loss of client
accounts, and stock market related influences, such as changes in estimates of
securities analysts, the presence or absence of short-selling of the Company's
stock, and events affecting other companies that the market deems to be
comparable to the Company. In addition, the stock market has from time to time
experienced extreme price and volume fluctuations that have particularly
affected the market price of many technology-oriented companies and that often
have been unrelated or disproportionate to the operating performance of these
companies. These broad market fluctuations may adversely affect the market price
of the Company's Common Stock. The trading prices of many high technology and
Internet-related companies' stocks are at or near their historical highs and
reflect price/earning ratios substantially above historical norms. There can be
no assurance that the trading price of the Company's Common Stock will remain at
or near its current level. The following table reflects the high and low per
share sale prices for the Company's Common Stock for the five fiscal quarters
ended March 1, 1998:
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
First Quarter, Fiscal 1997 $36.25 $20.63
Second Quarter, Fiscal 1997 $34.25 $20.25
Third Quarter, Fiscal 1997 $44.75 $29.00
Fourth Quarter, Fiscal 1997 $46.25 $11.38
First Quarter, Fiscal 1998 $19.00 $12.38
</TABLE>
Control by Existing Stockholders; Anti-Takeover Effects of
Certificate of Incorporation and Delaware Law. Executive officers, directors,
holders of five percent or more of the Company's Common Stock and companies
associated with such persons collectively own approximately 35% of the Company's
outstanding Common Stock, including approximately 13% held by The Interpublic
Group of Companies, Inc. Accordingly, such persons will have the effective power
to influence significantly the outcome of matters submitted for the vote of
stockholders, including the election of members of the Board of Directors and
the approval of significant change in control transactions. Their combined
equity interest in the Company accordingly may have the effect of making certain
transactions more difficult in the absence of the support of management of the
Company and may have the effect of delaying, deferring or preventing a change in
control of the Company. In addition, the Board of Directors has the authority to
issue up to 5,000,000 shares of Preferred Stock and to determine the price,
rights, preferences, privileges and restrictions, including voting rights, of
such stock without further stockholder approval. The rights of the holders of
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. Issuance of
Preferred Stock could have the effect of delaying, deferring or preventing a
change in control of the Company. Furthermore, certain provisions of the
Company's Certificate of Incorporation and of Delaware law could have the effect
of delaying, deferring or preventing a change in control of the Company.
-8-
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SELLING STOCKHOLDERS
The shares of Common Stock to be sold by the Selling Stockholders
pursuant to this Prospectus represent shares issued to the Selling Stockholders
by the Company in connection with the acquisitions of Donovan & Green and
Gormley & Partners (the "Acquisitions"). The following tables set forth the
aggregate number of shares of Common Stock held by each Selling Stockholder and
the aggregate number of shares of Common Stock offered by each Selling
Stockholder hereunder. No Selling Stockholder holds more than 1% of the
Company's outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO NUMBER OF SHARES OWNED AFTER
NAME OF SELLING STOCKHOLDER OFFERING BEING OFFERED OFFERING
------------------------------ ---------------- ---------------- ----------------
<S> <C> <C> <C>
Q5, Inc. ..................... 14,874 14,874 --
ALI Consulting, Inc. ......... 22,451 22,451 --
TOTAL ........................ 37,325 37,325 --
</TABLE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they or
their pledgees, donees, transferees or other successors in interest intend to
sell all or a portion of the shares offered hereby from time to time in the
over-the-counter market and that sales will be made at prices prevailing at the
times of such sales. Such persons may also make private sales directly or
through a broker or brokers, who may act as agent or as principal. In connection
with any sales, the Selling Stockholders and any brokers or dealers
participating in such sales may be deemed to be underwriters within the meaning
of the Securities Act. The Company will receive no part of the proceeds of sales
made hereunder.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholders and/or purchasers of the
shares offered hereby (and, if it acts as agent for the purchaser of such
shares, from such purchaser). Usual and customary brokerage fees will be paid by
the Selling Stockholders. Broker-dealers may agree with the Selling Stockholders
to sell a specified number of shares at a stipulated price per share, and, to
the extent such a broker-dealer is unable to do so acting as agent for the
Selling Stockholders, to purchase as principal any unsold shares at the price
required to fulfill the broker-dealer commitment to the Selling Stockholders.
Broker-dealers who acquire shares as principal may thereafter resell such shares
from time to time in transactions (which may involve cross and block
transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above) in the over-the-counter
market, in negotiated transactions or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above.
The Company has advised the Selling Stockholders that Regulation M
promulgated under the Exchange Act may apply to its sales in the market, has
furnished the Selling Stockholders with a copy of this regulation and has
informed them of the need for delivery of copies of this Prospectus. The Selling
Stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act. Any commissions paid or any
-9-
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discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal. The Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act.
Any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
There can be no assurance that the Selling Stockholders will sell any
or all of the shares of Common Stock offered by it hereunder.
LEGAL MATTERS
The validity of the CKS Common Stock issuable pursuant to the
Acquisitions and certain other legal matters related to the Acquisitions were
passed upon for CKS by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California.
EXPERTS
The consolidated balance sheets of the Company as of November 30,
1997 and 1996, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the years in the three-year period ended
November 30, 1997, have been incorporated by reference herein and in the
Registration Statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
The financial statements of McKinney & Silver, a general partnership,
as of December 31, 1996, and for each of the years in the two-year period ended
December 31, 1996, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report by Ernst & Young, LLP,
independent auditors, incorporated by reference herein, and given on their
authority of such firm as experts in accounting and auditing.
-10-
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Additional Information..................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Risk Factors............................................................... 4
Selling Stockholders....................................................... 9
Plan of Distribution....................................................... 9
Legal Matters............................................................. 10
Experts................................................................... 10
</TABLE>
37,325 SHARES
CKS GROUP, INC.
---------------
COMMON STOCK
PROSPECTUS
__________, 1998
-11-
13
CKS GROUP, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
NUMBER
Item 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except Securities
and Exchange Commission and Nasdaq Stock Market Listing fees are estimates.
<TABLE>
<S> <C>
Registration Statement--Securities and Exchange Commission.............. $ 243
Nasdaq Stock Market Listing Fee......................................... $ 2,000
Accounting fees......................................................... $ 7,500
Legal fees.............................................................. $ 7,500
Miscellaneous........................................................... $ 2,500
Total................................................................... $ 19,743
</TABLE>
Item 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation limits, to the maximum extent
permitted by Delaware law, the personal liability of directors for monetary
damages for breach of their fiduciary duties as a director. The Company's Bylaws
provide that the Company shall indemnify its officers and directors and may
indemnify its employees and other agents to the fullest extent permitted by
Delaware law. The Company has entered into indemnification agreements with its
officers and directors containing provisions which are in some respects broader
than the specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements require the Company, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as directors or officers
(subject to certain exceptions) and to advance their expenses incurred as a
result of any proceeding against them as to which they could be indemnified.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and with respect to any criminal action, had no reasonable cause
to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
II-1
14
Item 16 EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
2.1 Asset Purchase Agreement, dated as of October 4, 1996, by and
among Registrant, Donovan & Green, Inc., a New York corporation
("Donovan & Green"), DG Acquisition Inc., a Delaware corporation
("Sub"), Nancye L. Green and Michael Donovan.*
2.2 Amendment No. 1 to Asset Purchase Agreement, dated December 30,
1996, by and among Registrant, Donovan & Green, Sub, Nancye L.
Green and Michael Donovan.*
4.1 Declaration of Registration Rights Agreement by CKS dated
December 31, 1996.
4.2 Registration Rights Agreement by and between the Company and
Gormley & Partners dated March 12, 1997.+
5.1 Opinion of Wilson Sonsini Goodrich & Rosati.
23.1 Consent of KPMG Peat Marwick, LLP, independent auditors.
23.2 Consent of Ernst & Young, LLP, independent auditors.
23.4 Consent of Wilson Sonsini Goodrich & Rosati (Included in Exhibit
5.1).
24.1 Power of Attorney (see page II-4).
</TABLE>
----------
* Incorporated by reference from exhibit to Registrant's
current report on Form 8-K dated January 3, 1997 filed with
the Commission.
+ Incorporated by reference from exhibit to Registrant's Registration
Statement on Form S-3 (Registration No. 333-23783).
Item 17 UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities as that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange
II-2
15
Act of 1934; and, where interim financial information required to be presented
by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, certifies that it has reasonable cause to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cupertino, State of California, on the 17th day of
April, 1997.
CKS GROUP, INC.
By: /s/ ROBERT T. CLARKSON
---------------------------------
Robert T. Clarkson, Executive
Vice President, and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Mark D. Kvamme, Carlton H. Baab and
Robert T. Clarkson, jointly and severally, his or her attorneys-in-fact, each
with the power of substitution, for him or her in any and all capacities, to
sign any amendment to this Registration Statement on Form S-3 (including
post-effective amendments or any abbreviated registration statement and any
amendments thereto filed pursuant to Rule 462(b) increasing the number of
securities for which registration is sought), and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his or her substitute or substitutes, may do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on April
17, 1998 in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MARK D. KVAMME Chief Executive Officer (Principal Executive Officer) April 17, 1998
-------------------------------------- and Chairman of the Board of Directors
(Mark D. Kvamme)
/s/ CARLTON H. BAAB Executive Vice President and Chief Financial Officer April 17, 1998
-------------------------------------- (Principal Financial and Accounting Officer)
(Carlton H. Baab)
/s/ ALEXANDRE BALKANSKI Director April 17, 1998
--------------------------------------
(Alexandre Balkanski)
/s/ PIERRE R. LAMOND Director April 17, 1998
--------------------------------------
(Pierre R. Lamond)
/s/ BARRY R. LINSKY Director April 17, 1998
--------------------------------------
(Barry R. Linsky)
/s/ MICHAEL B. SLADE Director April 17, 1998
--------------------------------------
(Michael B. Slade)
Director April 17, 1998
--------------------------------------
(Thomas K. Suiter)
</TABLE>
II-4
17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
2.1 Asset Purchase Agreement, dated as of October 4, 1996, by and
among Registrant, Donovan & Green, Inc., a New York corporation
("Donovan & Green"), DG Acquisition Inc., a Delaware corporation
("Sub"), Nancye L. Green and Michael Donovan.*
2.2 Amendment No. 1 to Asset Purchase Agreement, dated December 30,
1996, by and among Registrant, Donovan & Green, Sub, Nancye L.
Green and Michael Donovan.*
4.1 Declaration of Registration Rights Agreement by CKS dated
December 31, 1996.
4.2 Registration Rights Agreement by and between the Company and
Gormley & Partners dated March 12, 1997.+
5.1 Opinion of Wilson Sonsini Goodrich & Rosati.
23.1 Consent of KPMG Peat Marwick, LLP, independent auditors
23.2 Consent of Ernst & Young, LLP, independent auditors.
23.4 Consent of Wilson Sonsini Goodrich & Rosati (Included in Exhibit
5.1).
24.1 Power of Attorney (see page II-4).
</TABLE>
----------
* Incorporated by reference from exhibit to Registrant's current report on
Form 8-K dated January 3, 1997 filed with the Commission.
+ Incorporated by reference from exhibit to Registrant's Registration
Statement on Form S-3 (Registration No. 333-23783).
1
EXHIBIT 4.1
CKS GROUP, INC.
DECLARATION OF REGISTRATION RIGHTS
This Declaration of Registration Rights ("Declaration") is made as of
December 31, 1996, by CKS Group, Inc., a Delaware corporation ("CKS"), for the
benefit of Donovan & Green, Inc., a New York corporation (the "Company"),
acquiring shares of the Common Stock of CKS pursuant to that Asset Purchase
Agreement dated as of October 4, 1996, (the "Agreement") among CKS, the Company,
DG Acquisition Inc., a Delaware corporation ("Sub") and wholly-owned subsidiary
of CKS, Michael Donovan and Nancye Green.
1. Definitions. As used in this Declaration:
(a) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Act" means the Securities Act of 1933, as amended.
(c) "Closing Date" means the Closing Date as defined in Article
II of the Agreement.
(d) "Material Event" means the happening of any event during the
period that the registration statement described in Section 2 hereof is required
to be effective as a result of which, in the judgment of CKS, such registration
statement or the related Prospectus contains or may contain any untrue statement
of a material fact or omits or may omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading.
(e) "Registrable Securities" means shares of CKS Common Stock
issued to the Company as part of the Acquisition Consideration Amount pursuant
to the Agreement.
(f) "Registration Statement" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits registration of the Registrable Securities
under the Act.
(g) "SEC" means the Securities and Exchange Commission.
(h) "Shareholder" shall mean each of Michael Donovan and Nancye
Green. Terms not otherwise defined herein have the meanings given to them in the
Agreement.
2. Registration. CKS shall use its commercially reasonable best efforts
to cause the Registrable Securities held by the Company to be registered under
the Act on their respective dates of issue to the Company so as to permit the
immediate resale thereof, and in connection therewith shall
2
prepare and file with the SEC and shall use its commercially reasonable best
efforts to cause to become effective at such times, a Registration Statement in
such form as is then available under the Act covering the Registrable
Securities; provided, however, that the Company shall provide all such
information and materials relating to the Company and take all such action as
may be reasonably required in order to permit CKS to comply with all the
applicable requirements of the SEC and to obtain any desired acceleration of the
effective date of such Registration Statement, such provision of such
information and materials to be a condition precedent to the obligations of CKS
pursuant to this Declaration. The offerings made pursuant to such registration
shall not be underwritten.
3. Postponement of Registration.
(a) Registration. Notwithstanding Section 2 above, CKS shall be
entitled to postpone the declaration of effectiveness of the Registration
Statement prepared and filed pursuant to Section 2 for a reasonable period of
time, but not in excess of ninety (90) calendar days after the applicable
deadline, if the Board of Directors of CKS, acting in good faith, determines
that there exists material non-public information about CKS.
(b) Material Event. The Company agrees that, upon receipt of any
notice from CKS of the happening of a Material Event, the Company will forthwith
discontinue disposition of the Registrable Securities pursuant to the
Registration Statement described in Section 2 until the Company's receipt of
copies of supplemented or amended prospectuses prepared by CKS, and, if so
directed by CKS, the Company will deliver to CKS (at the expense of CKS) all
copies in its possession, other than permanent file copies then in the Company's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In no event shall CKS delay causing to be
effective a supplement or post-effective amendment to a Registration Statement
pursuant to Section 2 or the related prospectus, for more than sixty (60)
consecutive days or one hundred twenty days (120) days during any 365
consecutive calendar day period.
4. Obligations of CKS. CKS shall (i) prepare and file with the SEC the
Registration Statement in accordance with Section (2) hereof with respect to the
shares of Registrable Securities and shall use commercially reasonable efforts
to cause such Registration Statement to become effective as provided in Section
2 and to keep such Registration Statement effective until the earlier of the
sale of all of the Registrable Securities so registered or the second
anniversary of the issuance of such shares by CKS to the Company; (ii) promptly
prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary and to comply with the provisions of the Act with respect to the sale
or other disposition of all securities proposed to be registered in such
Registration Statement until the earlier of the sale of all of the shares of
Registrable Securities so registered or the second anniversary of the issuance
of such shares by CKS to the Company; (iii) furnish to the Company without
charge such number of copies of such Registration Statements, each amendment and
supplement thereto, and any prospectus (including any preliminary prospectus and
any amended or supplemented prospectus) in conformity with the requirements of
the Act, and such other documents, as the Company may reasonably request in
order to effect the offering and sale of the shares of the Registrable
Securities to be offered and sold, but only while CKS shall be required under
the provisions hereof to cause the Registration Statement to remain current;
(iv) use its
-2-
3
commercially reasonable efforts to register or qualify the shares of the
Registrable Securities covered by such Registration Statement under the
securities or blue sky laws of such jurisdictions as the Company shall
reasonably request (provided that CKS shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction where it has not
been qualified), keep such registration or qualification in effect for as long
as such Registration Statement remains in effect, and do any and all other acts
or things which may be necessary or advisable to enable the Company to
consummate the public sale or other disposition of the Registrable Securities in
such jurisdictions; (v) cause all such Registrable Securities to be listed on
each securities exchange or National Automated Quotation System on which similar
securities issued by CKS are then listed, and enter into such customary
agreements as may be required in furtherance thereof, including, without
limitation, listing applications and indemnification agreements in customary
form; (vi) notify the Company upon the happening of any event as a result of
which the prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing; (vii) so long as
the Registration Statement remains effective, promptly prepare, file and furnish
to the Company a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of the Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing; (viii) notify the Company,
promptly after it shall receive notice thereof, of the date and time the
Registration Statement and each post-effective amendment thereto has become
effective or a supplement to any prospectus forming a part of such Registration
Statement has been filed; (ix) notify the Company promptly of any request by the
SEC for the amending or supplementing of such Registration Statement or
prospectus or for additional information; (x) make such representations and
warranties (subject to appropriate disclosure schedule exceptions) to the
Company, in form, substance and scope as are customarily made by issuers to
selling stockholders in public offerings; and (xi) advise the Company, promptly
after it shall receive notice or obtain knowledge thereof, of the issuance of
any stop order by the SEC suspending the effectiveness of the Registration
Statement or the issuance by any state of securities commission or other
regulatory authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Securities under state securities or
"blue sky" laws, or the initiation or threatening of any proceeding for that
purpose and promptly use its commercially reasonable best efforts to prevent the
issuance of any stop order or other order or to obtain its withdrawal if such
stop order or other order should be issued. In connection with any offering of
shares of Registrable Securities registered pursuant to this Declaration, CKS
shall (x) furnish the Company, at CKS's expense, with unlegended certificates
representing ownership of the shares of Registrable Securities being sold in
such denominations as the Company shall request and (y) instruct the transfer
agent and registrar of the Registrable Securities to release any stop transfer
orders with respect to the shares of Registrable Securities being sold.
5. Expenses. CKS shall pay the expenses incurred by CKS in connection
with any registration of Registrable Securities pursuant to this Declaration
including all SEC, NASD and blue sky registration and filing fees, printing
expenses, transfer agents' and registrars' fees, and the reasonable fees and
disbursements of CKS's outside counsel and independent accountants. The Company
shall be
-3-
4
responsible for all underwriting discounts, commissions and transfer taxes, as
well as any other expenses incurred by the Company, including the fees and
disbursements of counsel to the Company.
6. Indemnification. In the event of any offering registered pursuant to
this Declaration:
(a) CKS will indemnify and hold harmless, to the extent
permitted by law, the Company, each of its officers, directors, employees and
agents and each person controlling the Company within the meaning of Section 15
of the Act, with respect to which registration, qualification or compliance has
been effected pursuant to this Declaration, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading, or any
violation by CKS of any rule or regulation promulgated under the Act, or state
securities laws, or common law, applicable to CKS in connection with any such
registration, qualification or compliance, and will reimburse the Company, each
of its officers, directors and each person controlling the Company, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that CKS will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to CKS by an
instrument duly executed by the Company or underwriter and stated to be
specifically for use therein.
(b) The Company will indemnify CKS, each of its directors and
officers, each person who controls CKS within the meaning of Section 15 of the
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof) solely arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to CKS by an instrument duly executed by the Company and
stated to be specifically for use therein and will reimburse CKS, the Company,
such directors, officers, or control persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to CKS by an instrument duly executed by the Company and stated to be
specifically for use therein.
-4-
5
(c) Each party entitled to indemnification under this Section 6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has written notice of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to participate in and assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is actually impaired as a result of such
failure to give notice. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of an unconditional release from all liability in respect to
such claim or litigation or which involves other than the payment of money and
such money is actually paid by the Indemnifying Party. Whether or not the
defense of any claim or action is assumed by the Indemnifying Party, such
Indemnifying Party will not be subject to any liability for any settlement
without its consent, which consent will not be unreasonably withheld.
(d) The obligations of CKS and the Company under this Section 6
shall survive the completion of any offering of stock in a registration
statement under this Declaration.
7. Non-Assignment of Registration Rights. The rights to cause CKS to
register Registrable Securities pursuant to this Declaration may not be assigned
by the Company to any person or entity other than a Shareholder.
8. Amendment of Registration Rights. This Agreement may be amended by
the Company and CKS at any time by execution of an instrument in writing signed
on behalf of each of the parties.
9. Termination. The registration rights set forth in this Declaration
shall terminate at such time as all of the Registrable Securities then held by
the Company can be sold by the Company in a single 3-month period in accordance
with Rule 144 under the Act; provided that CKS during such period has complied
with any current public information requirements necessary for the sale of the
Registrable Securities.
10. Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed effectively given upon
delivery to the party to be notified in person or by courier service or five
days after deposit with the United States mail, postage prepaid, addressed (a)
if to the Company, at the Company's address as set forth in the securities
register of CKS or (b) if to CKS at 10441 Bandley Drive, Cupertino, California
95014.
11. Governing Law; Interpretation. This Declaration of Registration
Rights shall be construed in accordance and governed for all purposes by the
laws of the State of New York regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
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6
12. Severability; Survival. If any portion of this Declaration of
Registration Rights is held by a court of competent jurisdiction to conflict
with any federal, state or local law, or to be otherwise invalid or
unenforceable, such portion of this Declaration of Registration Rights shall be
of no force or effect, and this Declaration of Registration Rights shall
otherwise remain in full force and effect and be construed as if such portion
had not been included in this Declaration of Registration Rights.
13. Entire Agreement. This Declaration of Registration Rights contains
the entire agreement and understanding of the parties and supersedes all prior
discussions, agreement and understandings relating to the subject matter hereof.
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EXHIBIT 5.1
April 17, 1998
CKS Group, Inc.
10441 Bandley Drive
Cupertino, California 95014
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed
by you with the Securities and Exchange Commission on or about April 16, 1998
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 37,325 shares of your Common
Stock (the "Shares"), to be offered for sale by the Selling Stockholders named
therein. As legal counsel for CKS Group, we have examined the proceedings taken
in connection with the sale of the Shares by the Selling Stockholders in the
manner set forth in the Registration Statement in the Section entitled "Plan of
Distribution." It is our opinion that the Shares are legally and validly issued,
fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, including the prospectus constituting a part thereof,
and further consent to the use of our name wherever it appears in the
Registration Statement and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
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EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS
The Board of Directors
CKS Group, Inc.:
We consent to incorporation herein by reference of our report dated
December 15, 1997, relating to the consolidated balance sheets of CKS Group,
Inc. and subsidiaries as of November 30, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended November 30, 1997, which report
appears in the Form 10-K of CKS Group, Inc. for the fiscal year ended November
30, 1997. We also consent to the references to our firm under the heading
"Experts" in the Prospectus.
/s/ KPMG PEAT MARWICK LLP
Mountain View, California
April 15, 1998
1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors of
CKS Group, Inc.:
We consent to the reference to our firm under the caption "Experts"
and to the use of our report dated January 31, 1997, with respect to the
financial statements of McKinney & Silver incorporated herein by reference from
the report on Form 8-K/A of CKS Group, Inc., dated January 31, 1997, as amended
March 6, 1997 and May 28, 1997.
/s/ ERNST & YOUNG LLP
Raleigh, North Carolina
April 14, 1998