SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
NOVEMBER 2, 1997
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
INDIVIDUAL, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-27734 04-3036959
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
8 NEW ENGLAND EXECUTIVE PARK WEST,
BURLINGTON, MASSACHUSETTS 01803
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(617) 273-6000
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
EXHIBIT INDEX LOCATED ON PAGE 8
ITEM 5. OTHER EVENTS
On November 2, 1997, Individual, Inc., a Delaware corporation
("Individual"), and Desktop Data, Inc., a Delaware corporation ("Desktop"),
entered into an Agreement and Plan of Merger and Reorganization (the "Merger
Agreement"). The Merger Agreement is filed herewith as Exhibit 2.1 and is
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incorporated herein by reference. A copy of the joint press release of Desktop
and Individual dated November 3, 1997 is filed herewith as Exhibit 99.1 and is
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incorporated herein by reference.
Pursuant to the Merger Agreement, and subject to the conditions set forth
therein (including approval by stockholders of Individual and Desktop),
Individual will be merged with and into Desktop (the "Merger").
At the effective time of the Merger (the "Effective Time"), the separate
existence of Individual will cease and Desktop will continue as the surviving
corporation (the "Surviving Corporation"). In connection with the Merger,
holders of outstanding Individual Common Stock $.01 par value per share
("Individual Common Stock"), will receive, in exchange for each share of
Individual Common Stock held by them, one-half (1/2) of a share of Desktop
Common Stock, $.01 value per share ("Desktop Common Stock"). In addition,
Desktop will assume all outstanding options under Individual's Amended and
Restated 1989 Stock Option Plan, 1995 Incentive Stock Option Plan, 1996 Non-
Employee Directors Stock Option Plan, 1996 Stock Option Plan and Amended and
Restated 1996 Stock Plan and will assume all purchase rights outstanding under
Individual's 1996 Employee Stock Purchase Plan. Furthermore, Desktop will assume
all outstanding warrants for the purchase of Individual Common Stock. If the
Merger is consummated, Individual Common Stock will be deregistered under the
Securities Exchange Act of 1934, as amended, and delisted from the Nasdaq
National Market.
The Merger Agreement contains customary representations and warranties on
the part of Individual and Desktop, and the consummation of the Merger is
subject to customary closing conditions, including, without limitation, approval
by the stockholders of Individual and Desktop and the occurrence of no event
with a material adverse effect with respect to a party. The Merger Agreement
also contains covenants regarding the activities of the parties pending
consummation of the Merger. Generally, each of the parties must conduct its
business in the ordinary course consistent with past practice.
The Merger Agreement provides for the payment of a fee of $3,500,000 by
Desktop to Individual upon the earliest occurrence of the following events: (a)
the termination of the Merger Agreement by Individual upon the occurrence of one
of the following events: (i) the Board of Directors of Desktop withholds,
withdraws or modifies in a manner adverse to Individual its recommendation in
favor of the Merger, (ii) a Terminating Breach by Desktop (as defined in Section
7.01(g) of the Merger Agreement) or (iii) any representation or warranty on the
part of Desktop set forth in the Merger Agreement proves to be untrue at the
Effective Time, and such failure to be true is reasonably likely to have a
Material Adverse Effect (as defined in Section 1.13 of the Merger Agreement);
(b) the termination of the Merger Agreement by Individual or Desktop upon the
occurrence of one of the following events: (i) the acceptance of a Desktop
Superior Proposal (as defined below) by Desktop or the recommendation of such a
Desktop Superior Proposal by the Board of Directors of Desktop to its
stockholders or
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(ii) Desktop's failure to obtain the required vote by the stockholders of
Desktop at a meeting of such stockholders, if Desktop subsequently enters into
an Alternative Transaction (as defined in Section 7.03(d) of the Merger
Agreement) (a "Desktop Negative Vote"); or (c) the delivery of information by
Desktop to any person (or group of persons) other than Individual or its
affiliates or Desktop or its affiliates, as the case may be, (a "Third Party"),
as described in Section 4.02(b)(iii) of the Merger Agreement.
The Merger Agreement provides for the payment of a fee of $3,500,000 by
Individual to Desktop upon the earliest occurrence of the following events: (a)
the termination of the Merger Agreement by Desktop upon the occurrence of one of
the following events: (i) the Board of Directors of Individual withholds,
withdraws or modifies in a manner adverse to Desktop its recommendation in favor
of the Merger, (ii) a Terminating Breach by Individual (as defined in Section
7.01(g) of the Merger Agreement) or (iii) any representation or warranty on the
part of Individual set forth in the Merger Agreement proves to be untrue at the
Effective Time, and such failure to be true is reasonably likely to have a
Material Adverse Effect (as defined in Merger Agreement, Section 1.13); (b) the
termination of the Merger Agreement by Desktop or Individual upon the occurrence
of one of the following events: (i) the acceptance of an Individual Superior
Proposal (as defined below) by Individual or the recommendation of such an
Individual Superior Proposal by the Board of Directors of Individual to its
stockholders or (ii) the failure of Individual to obtain the required vote by
the stockholders of Individual at a Meeting of such stockholders, if Individual
enters an Alternative Transaction (an "Individual Negative Vote"); or (c) the
delivery of information by Individual to a Third Party, as described in Section
4.02(a)(iii) of the Merger Agreement.
The foregoing summary of the Merger is qualified in its entirety by
reference to the copy of the Merger Agreement included as Exhibit 2.1 and
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incorporated herein in its entirety by reference.
As an inducement to Individual to enter into the Merger Agreement,
Individual and Desktop entered into a Stock Option Agreement, dated November 2,
1997 (the "Stock Option Agreement"). The Stock Option Agreement, by and between
Individual and Desktop grants Individual an irrevocable option (the "Stock
Option") to purchase up to 1,726,398 shares (the "Option Shares") of Desktop
Common Stock under the circumstances specified in the Stock Option Agreement by
exchanging therefor shares of Individual Common Stock at the rate of two (2)
shares of Individual Common Stock for each Option Share and/or, at Individual's
election, by paying a cash amount of $10.34 per share (the "Exercise Price").
The Stock Option Agreement is attached hereto as Exhibit 99.5 and is
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incorporated herein in its entirety by this reference.
Subject to certain conditions, the Stock Option may be exercised in whole
or in part by Individual upon: (a) the commencement of a tender or exchange
offer for 25% or more of any class of Desktop's capital stock; (b) the
termination of the Merger Agreement by Desktop upon the occurrence of one of the
following events: (i) the Board of Directors of Desktop withholds, withdraws or
modifies in a manner adverse to Individual its recommendation in favor of the
Merger or (ii) any representation or warranty on the part of Desktop set forth
in the Merger Agreement proves to be untrue at the Effective Time, and such
failure to be true is reasonably likely to have a Material Adverse Effect (as
defined in Section 1.13 of the Merger Agreement); (c) the termination of the
Merger Agreement by Desktop or Individual upon the occurrence of
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one of the following events: (i) the acceptance of a Desktop Superior Proposal
by Desktop or the recommendation of such a Desktop Superior Proposal by the
Board of Directors of Desktop to its stockholders or (ii) in the event of a
Desktop Negative Vote; or (d) the delivery of information by Desktop to a Third
Party, as described in Section 4.02(b)(iii) of the Merger Agreement (any of the
events specified in clauses (b), (c) or (d) of this sentence are referred to
herein as an "Exercise Event"). The Stock Option terminates upon the earlier of
(i) the Effective Time, (ii) 180 days following the termination of the Merger
Agreement if an Exercise Event shall have occurred on or prior to the date of
such termination, or (iii) the date on which the Merger Agreement is terminated
if an Exercise Event shall not have occurred on or prior to such date; provided,
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however, with respect to clause (ii) of this sentence, if the Stock Option
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cannot be exercised by reason of any applicable government order, then the Stock
Option shall not terminate until the tenth business day after such impediment to
exercise shall have been removed or shall have become final and not subject to
appeal. Notwithstanding the foregoing, the Stock Option may not be exercised if
Individual is in breach in any material respect of any of its covenants or
agreements contained in the Merger Agreement.
As an inducement to Desktop to enter into the Merger Agreement, Desktop and
Individual have also entered into a Stock Option Agreement, dated November 2,
1997, which grants Desktop an irrevocable option to purchase up to 3,249,779
shares of Individual Common Stock under the circumstances specified in the Stock
Option Agreement between Individual and Desktop by exchanging therefor shares of
Desktop Common Stock at the rate of one-half (1/2) of a share of Desktop Common
Stock for each share of Individual Common Stock subject to such option and/or,
at Desktop's election, by paying a cash amount of $5.17 per share. The
substance of this agreement is substantially similar in substance to the
Stock Option Agreement, and a copy of this agreement is included as Exhibit 99.4
and incorporated herein in its entirety by reference.
The term "Desktop Superior Proposal" means an unsolicited bona fide written
Acquisition Proposal which the Board of Directors of Desktop determines in good
faith (after consultation with its financial advisors, and after receiving a
written opinion of outside counsel to the effect that the Board of Directors is
required to recommend the Acquisition Proposal to its stockholders in order to
discharge properly its fiduciary duties) would result in a transaction more
favorable to Desktop's stockholders from a financial point of view than the
transaction contemplated by the Merger Agreement.
The term "Individual Superior Proposal" means an unsolicited bona fide
written Acquisition Proposal which the Board of Directors of Individual
determines in good faith (after consultation with its financial advisors, and
after receiving a written opinion of outside counsel to the effect that the
Board of Directors is required to recommend the Acquisition Proposal to its
stockholders in order to discharge properly its fiduciary duties) would result
in a transaction more favorable to Individual's stockholders from a financial
point of view than the transaction contemplated by this Agreement.
The term "Acquisition Proposal" means the initiation or submission of any
inquiries, proposals or offers regarding any acquisition, merger, take-over bid,
sale of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving
Individual or Desktop or any subsidiaries of Individual or Desktop, with the
exception of discussions involving Individual leading to the acquisition of
ClariNet Communications Corp., the Acquisition of NewsPage or the creation of a
joint ventures to
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market and operate NewsPage and/or the Netscape Netcenter businesses, provided
no agreement is entered into without the consent of Desktop.
Also as an inducement to Individual to enter into the Merger Agreement,
certain stockholders of Desktop (collectively, the "Participation Agreement
Stockholders") have entered into a Participation Agreement dated November 3,
1997 (the "Participation Agreement") with Individual. Pursuant to the
Participation Agreement, the Participation Agreement Stockholders have agreed to
vote the shares of Desktop Common Stock owned by them (i) in favor of approval
and adoption of the Merger Agreement and the Merger and any matter that could
reasonably be expected to facilitate the Merger and (ii) against approval of any
proposal made in opposition to or competition with consummation of the Merger.
The Participation Agreement Stockholders have also agreed if requested by
Individual to execute and deliver to Individual an irrevocable proxy granting
Individual the authority to vote the shares of Desktop Common Stock owned by the
Participation Agreement Stockholders in the manner described in the previous
sentence. The Participation Agreement terminates upon the earlier to occur of
the Effective Time or the termination of the Merger Agreement. Individual did
not pay any additional consideration to any Participation Agreement Stockholder
in connection with the execution and delivery of the Participation Agreement.
The foregoing summary of the Participation Agreement is qualified in its
entirety by reference to the copy of the Participation Agreement included as
Exhibit 99.3 and incorporated herein in its entirety by reference.
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As an inducement to Desktop to enter into the Merger Agreement, certain
stockholders of Individual have entered into a Participation Agreement dated
November 3, 1997 with Desktop, the substance of which is substantially similar
to the substance of the Participation Agreement. A copy of this Participation
Agreement is included as Exhibit 99.2 and incorporated herein in its entirety by
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reference.
As a result of the Participation Agreement, Desktop has shared power to
vote an aggregate of 4,895,398 shares of Individual Common Stock for the limited
purposes described above, and such shares constitute approximately 28.2% of the
issued and outstanding shares of Individual Common Stock as of October 31, 1997.
To the extent that Desktop, as permitted by the Participation Agreement,
requests proxies to vote all of the shares of Individual Common Stock subject to
the Participation Agreements and such proxies are so granted, Desktop will have
sole voting power with respect to such shares.
As a result of the Participation Agreement between Individual and certain
stockholders of Desktop, Individual has shared power to vote an aggregate of
2,783,580 shares of Desktop Common Stock for the limited purposes described
above, and such shares constitute approximately 31.9% of the issued and
outstanding shares of Desktop Common Stock as of October 31, 1997. To the
extent that Individual, as permitted by the Participation Agreements, requests
proxies to vote all of the shares of Desktop Common Stock subject to the
Participation Agreements and such proxies are so granted, Individual will have
sole voting power with respect to such shares.
Also in connection with the Merger Agreement, the Participation Agreement
Stockholders and the stockholders of Individual who have executed a
Participation Agreement in favor of Desktop (each an "Affiliate") have each
entered into an Affiliate Agreement with
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Desktop (collectively, the "Affiliate Agreements") pursuant to which each
Affiliate has agreed not to sell, exchange, transfer, pledge, dispose or
otherwise reduce its risk relative to any shares of Desktop Common Stock or
other equity securities of Desktop (and Individual Common Stock with respect to
its Affiliates) owned by it during the period commencing on November 3, 1997 and
ending at such time as financial results covering at least 30 days of combined
operations of Desktop and Individual have been published by Desktop, in the form
of a quarterly earnings report, an effective registration statement filed with
the Securities and Exchange Commission ("Commission"), a report to the
Commission on Form 10-K, 10-Q or 8-K, or any other public filing or announcement
which includes the combined results of operations, so as to interfere with
Desktop's accounting for the Merger as a pooling of interests. The foregoing
summary of the Affiliate Agreements is qualified in its entirety by reference to
the forms of the Affiliate Agreements included as Exhibits 99.6 and 99.7 and
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incorporated herein in their entirety by reference.
The directors of Desktop immediately prior to the Effective Time shall be
the initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation, and the officers of Desktop immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified.
The Certificate of Incorporation of Desktop, as in effect immediately prior
to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by Delaware Law and
such Certificate of Incorporation; provided, however, that the Certificate of
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Incorporation of the Surviving Corporation shall be amended as of the Effective
Time (i) to increase the number of authorized shares of capital stock of the
Surviving Corporation and (ii) to provide that the name of the Surviving
Corporation is "NewsEDGE Corporation."
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
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Exhibit No. Description
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2.1 Agreement and Plan of Merger and Reorganization dated November
2, 1997, by and between Desktop Data, Inc., a Delaware
corporation, and Individual, Inc., a Delaware corporation.
99.1 Joint Press Release of Desktop Data, Inc. and Individual, Inc.,
dated November 3, 1997.
99.2 Participation Agreement dated November 3, 1997, by and between
Desktop Data, Inc., a Delaware corporation, and certain
stockholders of Individual, Inc., a Delaware corporation.
99.3 Participation Agreement dated November 3, 1997, by and among
Individual, Inc., a Delaware corporation, and certain
stockholders of Desktop Data, Inc., a Delaware corporation.
99.4 Stock Option Agreement dated November 2, 1997, by and between
Desktop Data, Inc., a Delaware corporation, and Individual,
Inc., a Delaware corporation.
99.5 Stock Option Agreement dated November 2, 1997, by and between
Individual, Inc., a Delaware corporation, and Desktop Data,
Inc., a Delaware corporation.
99.6 Form of Affiliate Agreement dated November 3, 1997, by and
between Desktop Data, Inc., a Delaware corporation, and certain
stockholders of Desktop Data, Inc.
99.7 Form of Affiliate Agreement dated November 3, 1997, by and
between Desktop Data, Inc., a Delaware corporation, and certain
stockholders of Individual, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INDIVIDUAL, INC.
Date: November 14, 1997 By: /s/ Michael E. Kolowich
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Michael E. Kolowich,
President, Chief Executive
Officer and Director
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EXHIBIT INDEX
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Exhibit No. Description
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2.1 Agreement and Plan of Merger and Reorganization dated November
2, 1997, by and between Desktop Data, Inc., a Delaware
corporation, and Individual, Inc., a Delaware corporation.
99.1 Joint Press Release of Desktop Data, Inc. and Individual, Inc.,
dated November 3, 1997.
99.2 Participation Agreement dated November 3, 1997, by and between
Desktop Data, Inc., a Delaware corporation, and certain
stockholders of Individual, Inc., a Delaware corporation.
99.3 Participation Agreement dated November 3, 1997, by and among
Individual, Inc., a Delaware corporation, and certain
stockholders of Desktop Data, Inc., a Delaware corporation.
99.4 Stock Option Agreement dated November 2, 1997, by and between
Desktop Data, Inc., a Delaware corporation, and Individual,
Inc., a Delaware corporation.
99.5 Stock Option Agreement dated November 2, 1997, by and between
Individual, Inc., a Delaware corporation, and Desktop Data,
Inc., a Delaware corporation.
99.6 Form of Affiliate Agreement dated November 3, 1997, by and
between Desktop Data, Inc., a Delaware corporation, and certain
stockholders of Desktop Data, Inc.
99.7 Form of Affiliate Agreement dated November 3, 1997, by and
between Desktop Data, Inc., a Delaware corporation, and certain
stockholders of Individual, Inc.
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