288LAG4525/25.374103_1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 18, 1997
--------------
Commission File Number: 0-27734
---------
Individual, Inc.
- -----------------
(Exact Name of Registrant as Specified in Charter)
Delaware
- --------
(State or Other Jurisdiction of Incorporation)
04-303-6959
- -----------
I.R.S. Employer Identification No.)
8 New England Executive Park West, Burlington, Massachusetts 01803
- ------------------------------------------------------------------- ------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 273-6000
---------------
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 18, 1997, Individual, Inc. ("Individual") completed the
acquisition of ClariNet Communications Corp., a California corporation
("ClariNet"), by means of a merger (the "Merger") of CN Merger Corp., a
Delaware corporation and wholly-owned subsidiary of Individual ("Merger Sub"),
with and into ClariNet, with ClariNet continuing as the surviving corporation,
pursuant to that certain Agreement and Plan of Reorganization dated as of June
13, 1997, by and among Individual, Merger Sub, ClariNet and certain
shareholders of ClariNet (the "Merger Agreement"). As a result of the Merger,
ClariNet became a wholly-owned subsidiary of Individual. The Merger was
effected by the filing of a Certificate of Merger with the State of Delaware
and the filing of an Agreement of Merger with the State of California, each on
June 18, 1997 (the "Effective Date").
Pursuant to the terms of the Merger Agreement, upon the effectiveness of
the Merger, each outstanding share of ClariNet Common Stock, no par value per
share (the "ClariNet Common Stock"), was converted into the right to receive
0.21954874 (the "Exchange Ratio") shares of Individual Common Stock, $.01 par
value per share (the "Individual Common Stock") (subject to payment in cash in
lieu of any fractional shares). As a result of the Merger, the former
shareholders of ClariNet will receive an aggregate of approximately 1,475,000
shares of Individual Common Stock (including approximately 138,512 shares of
Individual Common Stock reserved for issuance upon exercise of outstanding
ClariNet stock options assumed by Individual in the Merger as described
below).
In addition, pursuant to the terms of the Merger Agreement, upon the
effectiveness of the Merger, Individual assumed all of the options (the
"ClariNet Options") outstanding under ClariNet's 1994 Incentive Stock Option
Plan, 1995 Incentive Stock Option Plan, and 1996 Stock Option Plan. In
connection with Individual's assumption of the ClariNet Options, based on the
Exchange Ratio, the shares of ClariNet Common Stock reserved for issuance upon
exercise of outstanding ClariNet Options were converted into an aggregate of
approximately 138,512 shares of Individual Common Stock reserved for issuance
thereunder.
The terms of the Merger and the consideration received by ClariNet's
securityholders in connection therewith were the result of arm's-length
negotiations between the representatives of Individual and the representatives
of ClariNet, and took into account various factors concerning the relative
valuations of the businesses and the securities of Individual and ClariNet.
The terms of the Merger and the exchange of ClariNet Common Stock for
Individual Common Stock are more fully described in the Merger Agreement, a
copy of which is filed as Exhibit 2.1 to this Report on Form 8-K (the
------------
"Report") and is incorporated herein by reference thereto.
The Merger is intended to qualify as a reorganization under Section 368
of the Internal Revenue Code of 1986, as amended. In addition, the Merger
will be accounted for as a pooling of interests.
Certain ClariNet shareholders and Broadview Associates ("Broadview") are
entitled to "shelf" resale registration rights with respect to the shares of
Individual Common Stock issued to the ClariNet shareholders in connection with
the Merger (including shares of Individual Common Stock reserved for issuance
upon exercise of ClariNet Options assumed by Individual) (collectively, the
"Merger Shares"), pursuant to the terms of that certain Registration Rights
Agreement dated as of June 18, 1997 among Individual, Broadview and the
ClariNet shareholders listed therein (the "Registration Rights Agreement").
Pursuant to the Registration Rights Agreement, Individual is obligated to use
its best efforts to file a Registration Statement (the "Registration
Statement") to register the resale of the Merger Shares as soon as reasonably
practicable after the Effective Date, and to use its reasonable best efforts
to cause such Registration Statement to become effective not later than
October 15, 1997. In addition, Individual is obligated to use its best
efforts to maintain the effectiveness of the Registration Statement for a
period of up to two years after the Effective Date, subject to certain
conditions and limitations set forth in the Registration Rights Agreement. In
addition, the Registration Rights Agreement grants certain "piggyback"
registration rights under certain limited conditions as described in the
Registration Rights Agreement. A copy of the Registration Rights Agreement is
filed as Exhibit 99.1 to this Report and is incorporated herein by reference
------------
thereto.
In connection with the Merger, Individual also entered into a Fee Payment
Agreement (the "Fee Payment Agreement") with Broadview, pursuant to which
Individual agreed, upon consummation of the Merger, to assume ClariNet's
obligation to pay Broadview $500,000 (the "Broadview Fee") as full payment for
all services provided by Broadview in connection with the Merger. The
Broadview Fee is payable in cash or Individual Common Stock in Individual's
discretion , subject to the terms and conditions of the Fee Payment Agreement.
A copy of the Fee Payment Agreement is attached hereto as Exhibit 99.2 of this
------------
Report and is incorporated herein by reference thereto.
For additional information concerning the Merger, see the press release
of Individual dated June 16, 1997, a copy of which is attached to this Report
as Exhibit 99.3 and incorporated herein by reference thereto.
-------------
* * * * * * * *
Individual develops and markets a suite of personalized information
services which provide business professionals with daily, personalized,
relevant news briefings, while offering information providers and advertisers
new ways to reach targeted audiences. ClariNet publishes a global electronic
newspaper on the internet called ClariNews, which is distributed through
internet service providers and to corporations, educational institutions and
individual subscribers.
Acquisitions, including Individual's acquisition of ClariNet, involve a
number of potential risks, including difficulties in the assimilation of the
acquired company's operations, technology, products and personnel, completing
and integrating acquired in-process technology, diversion of management's
resources, uncertainties associated with operating in new markets and working
with new employees and customers, and the potential loss of the acquired
company's key employees expected to join the acquiring company. In order for
Individual to achieve benefits from its acquisition of ClariNet, Individual
will need to integrate ClariNet's business, products, technology and key
employees into Individual's existing business and to make significant
expenditures for sales and marketing and product development to further
develop ClariNet's business. No assurance can be given that Individual will
be successful in this regard. Moreover, even if successfully integrated, the
acquired ClariNet operations may not achieve levels of revenue or productivity
comparable to those achieved by Individual's existing operations, or otherwise
perform as expected.
There can also be no assurance that the acquisition of ClariNet or any
future acquisitions will not have a material adverse effect upon Individual's
business and results of operations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
No Financial Statements or Pro Forma Financial Information are required
to be filed as a part of this Report.
(c) Exhibits.
--------
EXHIBIT NO. DESCRIPTION
- ------------ -----------
2.1 Agreement and Plan of Reorganization dated as of June 13, 1997, by and
among Individual, Inc., CN Merger Corp., ClariNet Communications Corp., and
certain shareholders of ClariNet Communications Corp.
99.1 Registration Rights Agreement dated as of June 18, 1997, by and among
Individual, Inc., Broadview Associates and certain shareholders of ClariNet
Communications Corp.
99.2 Fee Payment Agreement dated June 13, 1997, by and among Individual,
Inc., ClariNet Communications Corp., and Broadview Associates.
99.3 Press Release of Individual, Inc. dated June 16, 1997.
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.
-----------------
(Registrant)
Date: July 3, 1997
/s/Robert L. Lentz
Robert L. Lentz
Senior Vice President, Finance and
Administration and Chief Financial
Officer, Treasurer and Secretary
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1 Agreement and Plan of Reorganization dated as of June 13, 1997, by and
among Individual, Inc., CN Merger Corp., ClariNet Communications Corp., and
certain shareholders of ClariNet Communications Corp.
99.1 Registration Rights Agreement dated as of June 18, 1997, by and among
Individual, Inc., Broadview Associates and certain shareholders of ClariNet
Communications Corp.
99.2 Fee Payment Agreement dated June 13, 1997, by and among Individual,
Inc., ClariNet Communications Corp., and Broadview Associates.
99.3 Press Release of Individual, Inc. dated June 16, 1997.