As filed with the Securities and Exchange Commission on January 4, 2002
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VERTICALNET, INC.
(Exact name of Registrant as specified in its charter)
Pennsylvania 7319 23-2815834
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classification Identification No.)
Code No.)
700 Dresher Road
Horsham, Pennsylvania 19044
(215) 328-6100
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
James W. McKenzie, Jr.
Executive Vice President, General Counsel and Secretary
700 Dresher Road
Horsham, Pennsylvania 19044
(215) 328-6100
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
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, 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [_]
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SECURITY (2) OFFERING PRICE REGISTRATION FEE
Common Stock, $0.01 par 14,157,630 $1.445 $20,457,775.00 $4,889.41
value per share
(1) Additional securities registered hereby.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and
based upon the average of the high and low prices of the Common Stock
reported on the Nasdaq National Market on December 31, 2001.
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING HOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED JANUARY 4, 2002
PRELIMINARY PROSPECTUS
14,157,630 Shares
VERTICALNET, INC.
Common Stock
This prospectus relates to the public offering, which is not being
underwritten, of 14,157,630 shares of common stock that were issued to
securityholders of Atlas Commerce, Inc. in connection with our acquisition of
Atlas Commerce.
The selling shareholders may offer for resale through this prospectus the
shares of common stock at various times at market prices prevailing at the time
of sale or at privately negotiated prices. The selling shareholders may resell
the common stock to or through underwriters, broker-dealers or agents, who may
receive compensation in the form of discounts, concessions or commissions. We
will not receive any of the proceeds from the resale of the common stock offered
through this prospectus. We will bear all costs, expenses and fees in connection
with the registration of the shares. The selling shareholders will bear all
commissions and discounts, if any, attributable to the sales of the shares.
Shares of our common stock are quoted on the Nasdaq National Market under
the symbol "VERT." The last reported sale price of the shares on January 3, 2002
was $1.62 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
RISK FACTORS BEGIN ON PAGE 1.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
January __, 2002
TABLE OF CONTENTS
Page
SUMMARY...............................................................1
RISK FACTORS..........................................................1
FORWARD-LOOKING STATEMENTS...........................................14
USE OF PROCEEDS......................................................14
SELLING SHAREHOLDERS.................................................14
PLAN OF DISTRIBUTION.................................................16
LEGAL MATTERS........................................................17
EXPERTS..............................................................17
ABOUT THIS PROSPECTUS................................................18
WHERE YOU CAN FIND MORE INFORMATION..................................18
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus or incorporated by reference
in this prospectus and may not contain all the information that is important to
you.
Our Company
Verticalnet, Inc. develops extended enterprise management applications that
provide visibility into critical data, allowing organizations to communicate and
collaborate more effectively across the extended value chain. Our Collaborative
Sourcing applications offer a broad integrated sourcing solution delivered
through a multi-party collaborative platform allowing customers to plan,
execute, and manage the complete process of sourcing and procuring materials
while collaborating with suppliers to share operational data throughout the
purchase cycle. Our solutions are differentiated by our knowledge architecture,
a leading-edge technology that enables the extraction, organization, and
normalization of data in a timely and unobtrusive manner from disparate ERP and
legacy systems across the extended enterprise. Our Small/Medium Business Group
continues to be a leader in e-commerce enablement, with marketplace solutions
that connect buyers and suppliers online through its 59 industry-specific
marketplaces.
About Verticalnet
Principal Executive Offices: Internet Address:
Verticalnet, Inc. www.verticalnet.com (Information contained on
700 Dresher Road our Web site is not a part of this
Horsham, Pennsylvania 19044 prospectus)
Phone: (215) 328-6100
RISK FACTORS
OUR LIMITED OPERATING HISTORY AND EVOLVING REVENUE MODEL MAKE IT DIFFICULT TO
PREDICT OUR FUTURE OPERATING RESULTS AND EVALUATE OUR FUTURE PROSPECTS.
Our relatively limited operating history, together with our evolving
revenue model and rapid changes in our target markets, makes predicting our
future operating results and evaluating our future prospects very difficult. For
the three months ended September 30, 2001, approximately 70% of our overall
revenues were generated primarily from sales of storefronts, marketplace
managers and advertising on our industry marketplaces. In the foreseeable
future, we expect to continue generating a significant percentage of our overall
revenues from these sources, while generating additional revenues from
enterprise software licensing and related services. We may not be able to
sustain our current revenues or generate additional revenues as expected. If we
do not sustain our current revenues or generate additional revenues in each of
our current revenue streams, our business, financial condition and operating
results will suffer.
WE MAY REQUIRE ADDITIONAL CAPITAL FOR OUR OPERATIONS AND OBLIGATIONS, WHICH WE
MAY NOT BE ABLE TO RAISE OR, EVEN IF WE DO, COULD HAVE DILUTIVE AND OTHER
NEGATIVE EFFECTS ON OUR SHAREHOLDERS.
Although, based on our most recent projections, we believe our current
level of liquid assets and the expected cash flows from contractual arrangements
will be sufficient to finance our capital requirements and anticipated operating
losses for at least the next 12 months, any projection of future long-term cash
needs and cash flows are inherently subject to substantial uncertainty. We also
have a $14.0 million put and call agreement with British Telecommunications
whereby BT may sell its investment in Verticalnet Europe to us in March 2002.
Our ability to use our stock to pay this obligation may be limited by our stock
price and trading volume, so we may have to use cash to satisfy some or
substantially all of this obligation. There is no assurance that our resources
will be sufficient for anticipated or unanticipated working capital and capital
expenditure requirements during this period. We may need, or find it
advantageous, to raise additional funds in the future to fund our growth, pursue
sales and
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licensing opportunities, develop new or enhanced products and services, respond
to competitive pressures or acquire complementary businesses, technologies or
services.
If we raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership of our shareholders will
be reduced and shareholders will experience additional dilution. These new
securities may also have powers, preferences and rights that are senior to those
of the rights of our common stock. We cannot be certain that additional
financing will be available on terms favorable to us, if at all. If adequate
funds are not available or not available on acceptable terms, we may be unable
to fund our operations adequately, promote our brand identity, take advantage of
acquisition opportunities, develop or enhance products or services or respond to
competitive pressures. Any inability to do so could have a negative effect on
our business, financial condition and results of operations.
WE MAY NEVER GENERATE AN OPERATING PROFIT.
As of September 30, 2001, our accumulated deficit was approximately
$1.0 billion. For the nine months ended September 30, 2001, we sustained a
$639.7 million loss attributable to common shareholders (including preferred
stock dividends). We expect to incur operating losses for the foreseeable
future. We may never generate an operating profit or, even if we do become
profitable from operations at some point, we may be unable to sustain that
profitability.
WE MAY NOT DEVELOP SIGNIFICANT REVENUES FROM ENTERPRISE SOFTWARE LICENSING AND
RELATED SERVICES, WHICH COULD ADVERSELY AFFECT OUR FUTURE REVENUE GROWTH AND
ABILITY TO ACHIEVE PROFITABILITY.
One of the many challenges we face in growing future revenues and
achieving profitability is successfully refocusing our efforts on developing,
enhancing and promoting our enterprise software solutions and related services.
If we do not generate significant additional revenues from enterprise software
licensing and related services, our business, financial condition and operating
results will be impaired. Our ability to generate additional revenues depends on
the overall demand for enterprise software solutions and related services, as
well as general economic and business conditions. Suppressed demand for software
solutions and related services caused by a weakening economy may result in less
revenue growth than expected or even a decline in revenues. We cannot offer any
assurances that we will be able to develop, enhance or promote our enterprise
software solutions and related services effectively, whether as a result of
general economic conditions or otherwise.
IF WE CANNOT FURTHER REDUCE OUR EXPENSES, OUR OPERATING RESULTS WILL SUFFER.
Our limited operating history and our evolving revenue model make it
difficult to predict our future operating expenses. If we cannot further reduce
our expenses, our operating results will suffer. Some of our expenses are fixed,
including those related to non-cancelable agreements, equipment leases and real
estate leases. We have undertaken restructuring initiatives during 2001 in part
to reduce operating expenses. These reductions in force may not sufficiently
reduce our operating expenses to a level necessary to achieve an operating
profit. In addition, we may not be successful in further identifying and
eliminating redundancies within our business, or in streamlining our overall
operations as necessary to reduce our expenses.
FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY CAUSE OUR STOCK PRICE TO
DECLINE.
Our quarterly operating results are difficult to forecast and could
vary significantly. We believe that period-to-period comparisons of our
operating results are not meaningful and should not be relied on as indicators
of future performance. If our operating results in a future quarter or quarters
do not meet the expectations of securities analysts or investors, the price of
our common stock may fall.
We expect that our quarterly operating results will fluctuate
significantly due to various factors, many of which are beyond our control,
including:
- anticipated lengthy sales cycles for our products;
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- the size and timing of individual license transactions;
- intense and increased competition in our target markets;
- our ability to develop, introduce and bring to market new products and
services, or enhancements to our existing products and services, on a
timely basis;
- the level of demand for our products and services; and
- risks associated with past and future acquisitions.
If we generate additional revenues from enterprise software licensing
and related services as intended, our quarterly operating results will be
substantially dependent on orders booked and delivered in that quarter. Any
delay in the recognition of revenue for any of our license transactions could
likewise cause significant variations in our quarterly operating results and
could cause our revenues to fall significantly short of anticipated levels.
In the course of our business, we may acquire securities of
privately-held companies with whom we form strategic relationships. Our
quarterly operating results may also fluctuate significantly due to accounting
rules governing the treatment of these securities. Specifically, before the
market value of these securities becomes readily determinable as a result of
being tradable in a public market, they are carried on our consolidated balance
sheet at cost. However, if these non-public securities become salable in the
public market as a result of a transaction in which such securities are
exchanged for public securities, accounting rules require us to record a
non-operating gain or loss equal to the difference between our cost and the
market value of the public securities received, regardless of whether we sell or
retain the securities. Our holdings in public securities are then marked to
market at the end of each quarter. If the market value of an equity security we
own becomes readily determinable and we sell that security, we will realize a
gain or loss on the transaction. These nonrecurring gains or losses may occur
from time to time and could cause significant fluctuations in our quarterly
results. Similarly, our quarterly results may also fluctuate if we determine
that a decline in the fair value of one of our equity positions is other than
temporary, which would require us to write down or write off the carrying value
of those securities.
During the nine months ended September 30, 2001, we recorded an
aggregate of $218.6 million in impairment charges for other than temporary
declines in the fair value of several of our cost method, equity method and
available-for-sale investments, $195.4 million of which related to our
investment in Converge.
WE MAY BE UNABLE TO MAINTAIN OUR LISTING ON THE NASDAQ NATIONAL MARKET, WHICH
COULD CAUSE OUR STOCK PRICE TO FALL AND DECREASE THE LIQUIDITY OF OUR COMMON
STOCK.
Our common stock is currently listed on the Nasdaq National Market,
which has requirements for the continued listing of stock. One of the
requirements is that our common stock maintain a minimum bid price of $1.00 per
share. From late August to early October, 2001 the bid price for our common
stock dropped below $1.00 for 36 consecutive trading days. However, on September
27, 2001, the Nasdaq Stock Market suspended the minimum bid price requirement
until January 2, 2002. If our common stock trades below $1.00 for 30 consecutive
trading days after the minimum bid price requirement is reinstated, or it fails
to meet any of the other listing requirements, our common stock may be delisted
from the Nasdaq National Market and the trading market for our common stock
could decline, which could depress our stock price and adversely affect the
liquidity of our common stock.
IF OUR STRATEGIC RELATIONSHIP WITH CONVERGE DOES NOT PROVIDE THE CASH FLOW AND
OTHER BENEFITS WE EXPECT, OUR BUSINESS WILL BE MATERIALLY AND ADVERSELY
AFFECTED.
If we are ultimately unable, for any reason, to receive cash payments
expected from Converge and realize the other expected benefits from our
strategic relationship with Converge, our business, financial condition and
results of operations will be materially and adversely affected.
3
We believe this relationship offers validation of our business strategy
and opportunities to generate additional revenues in our enterprise software
business. However, we may never generate significant additional revenues or
realize any of the other benefits expected from this relationship. If we fail to
enter into additional material software licensing transactions, our financial
condition and operating results will be adversely affected.
Currently, a significant portion of our future cash flow requirements
are expected to be met through scheduled payments from Converge. A failure by
Converge to make all or a part of these payments on a timely basis, including
any restructuring of these payments (whether in terms of amount, timing or
otherwise) could have a material negative effect on our ability to meet our cash
flow requirements.
WE ANTICIPATE LENGTHY SALES AND IMPLEMENTATION CYCLES FOR OUR SOFTWARE
OFFERINGS.
We anticipate our sales cycles for our enterprise software offerings to
average approximately six to nine months. In selling our products, we may be
asking potential customers in many cases to change their established business
practices and conduct business in new ways. In addition, potential customers
must generally consider additional issues, such as product benefits, ease of
installation, ability to work with existing technology, functionality and
reliability, before committing to purchase our products. Additionally, we
believe that the purchase of our products is often discretionary and generally
involves a significant commitment of capital and other resources by a customer,
which frequently requires approval at a number of management levels within the
customer organization. Likewise, the implementation and deployment of our
enterprise software products requires a significant commitment of resources by
our customers and our professional services organization. The challenges we face
in attempting to obtain commitments and approvals from our customers may be
exacerbated by worsening economic conditions in general and in our target
markets, as well as by competition from other software solution providers whose
brands, products and services may be better known to, and more widely accepted
by, potential customers than ours.
WE EXPECT TO RELY ON THIRD PARTIES TO IMPLEMENT OUR PRODUCTS.
We expect to rely increasingly on third parties to implement our
products at customer sites. If we are unable to establish and maintain
effective, long-term relationships with implementation providers, or if these
providers do not meet the needs or expectations of our customers, our business
could be seriously harmed. As a result of the limited resources and capacities
of many third-party implementation providers, we may be unable to establish or
maintain relationships with third parties having sufficient resources to provide
the necessary implementation services to support our needs. If these resources
are unavailable, we will be required to provide these services internally, which
could significantly limit our ability to meet our customers' implementation
needs. A number of our competitors have significantly more well-established
relationships with third parties that we may potentially partner with. As a
result, these third parties may be more likely to recommend competitors products
and services rather than our own. In addition, we would not be able to control
the level and quality of service provided by our implementation partners.
NEW VERSIONS AND RELEASES OF OUR PRODUCTS MAY CONTAIN ERRORS OR DEFECTS.
Our enterprise software products may contain undetected errors or
failures when first introduced or as new versions are released. This may result
in loss of, or delay in, market acceptance of our products. Errors in new
releases and new products after their introduction could result in delays in
release, lost revenues and customer frustration during the period required to
correct these errors. We may in the future discover errors and defects in new
releases or new products after they are shipped or released.
OUR TARGET MARKETS ARE EVOLVING AND CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE,
WHICH WE MAY NOT BE ABLE TO KEEP PACE WITH.
The markets for our products and services are evolving and
characterized by rapid technological change, changing customer needs, evolving
industry standards and frequent new product and service announcements. The
introduction of products employing new technologies and emerging industry
standards could render our existing products or services obsolete or
unmarketable. If we are unable to respond to these developments successfully or
do
4
not respond in a cost-effective way, our business, financial condition and
operating results will suffer. To be successful, we must continually improve and
enhance the responsiveness, services and features of our marketplace products
and enterprise software products and introduce and deliver new product and
service offerings and new releases of existing products. We may fail to improve
or enhance our marketplace products and enterprise software products or
introduce and deliver new releases or new offerings on a timely and
cost-effective basis or at all. If we experience delays in the future with
respect to our industry marketplaces or enterprise software products, or if our
improvements, enhancements, offerings or releases to these products do not
achieve market acceptance, we could experience a delay or loss of revenues and
customer dissatisfaction. Our success will also depend in part on our ability to
acquire or license third party technologies useful in our business, which we may
not be able to do.
WE MAY ULTIMATELY BE UNABLE TO COMPETE IN THE MARKETS FOR THE PRODUCTS AND
SERVICES WE OFFER.
The markets for our products and services are intensely competitive.
Increased competition may result in reduced margins and loss of market share,
either of which could seriously harm our business. We expect the intensity of
competition in our target markets to increase as the amount of e-commerce
transacted over the Internet grows, current competitors expand their product and
service offerings and new competitors enter the market.
Examples of increased competition we expect to face include the
following:
- Several companies offer competitive industry marketplaces and
supplier enablement applications. Additional companies may offer
competing industry marketplaces on a standalone or portfolio
basis. Our Small/Medium Business group also competes for a share
of a customer's advertising budget with online services and
traditional offline media, such as print publications and trade
associations.
- Our enterprise software products and services face competition
from software companies whose products or services compete with a
particular aspect of the solution we provide, as well as several
major enterprise software developers.
Many of our competitors have longer operating histories, greater brand
recognition and greater financial, technical, marketing and other resources than
we do, and may have well-established relationships with our existing and
prospective customers. This may place us at a disadvantage in responding to our
competitors' pricing strategies, technological advances, advertising campaigns,
strategic partnerships and other initiatives. Our competitors may also develop
products or services that are superior to, or have greater market acceptance
than, ours. If we are unable to compete successfully against our competitors,
our business, financial condition and operating results would be negatively
impacted.
WE MAY NOT REALIZE ANY RETURN ON, AND MAY EVEN SUFFER A COMPLETE LOSS OF, OUR
EQUITY INTERESTS IN CONVERGE AND OUR STRATEGIC PARTNERS.
The sale of Verticalnet Exchanges to Converge in exchange for, among
other things, equity in Converge made us the largest stockholder in Converge. In
the quarter ended September 30, 2001, Converge undertook a strategic
restructuring of its operations, which ultimately resulted in us taking a $195.4
million impairment charge to write down our investment in Converge. In addition
to our equity ownership of Converge, we also have equity interests in other
companies. We may never realize any return on our equity interests in Converge
or these other entities. In fact, we may suffer a complete loss of these equity
interests, which would materially and adversely affect our business, financial
condition and operating results. Our ability to realize a return on any of these
equity positions is far from certain, given that these companies have limited
financial and other resources, yet are subject to many of the same risks and
uncertainties that we face in our business, including limited operating
histories, evolving revenue models and uncertain market acceptance of their
products and services. Moreover, we are often unable to require terms and
conditions related to equity interests in our strategic partners (e.g., board
membership or observer rights) that are particularly favorable to us vis-a-vis
other investors.
5
ACQUISITIONS MAY NEGATIVELY IMPACT OUR BUSINESS.
We have grown, and may continue to grow, our business through
acquisitions that complement our existing products and services. If we are
unable to complete future acquisitions, our business, financial condition and
operating results could be negatively impacted. We may not be able to identify
additional suitable businesses that are available for sale at reasonable prices
or on reasonable terms. Even if we are able to identify appropriate acquisition
candidates, we may not be able to negotiate the terms of any acquisition
successfully, finance the acquisition or integrate the acquired business
(including its products, services, technologies or personnel) into our existing
business operations.
Our acquisition strategy is also subject to numerous other risks
including, without limitation, the following:
- acquisitions may cause a disruption in our ongoing business,
distract our management and other resources and make it difficult
to maintain our standards, controls and procedures;
- we may acquire companies in markets in which we have little
experience;
- we may not be able to retain key employees from acquired
companies or from our own company after the acquisition, and may
face competition from employees that leave before or after an
acquisition is complete;
- to pay for acquisitions, we may be required to issue equity
securities, which may be dilutive to existing shareholders, or we
may be required to incur debt or spend cash, which would
negatively impact our liquidity and could impair our ability to
fund our operations;
- we may not realize any return on our investment in the acquired
companies and may even lose our entire investment and incur
significant additional losses;
- our share price could decline following market reaction to our
acquisitions; and
- our interest deductions may be disallowed for federal income tax
purposes.
IF OUR ADVERTISING REVENUES DECLINE, OUR BUSINESS WOULD SUFFER.
We currently rely on revenues generated from the sale of advertising on
our industry marketplaces for a material portion of our revenues. If we are not
able to increase or even maintain our current level of advertising revenues, our
business may suffer. Our ability to increase or maintain our advertising
revenues depends on many factors, including, without limitation:
- general economic conditions and their impact on demand for online
advertising;
- acceptance of the Internet as a legitimate, effective and
measurable medium for business advertising and e-commerce;
- the development of a large base of users on our industry
marketplaces who possess demographic characteristics attractive
to advertisers;
- changes in industry pricing practices for advertising;
- the evolving focus of our sales and marketing efforts; and
- our ability to build and maintain relationships with third-party
advertisement delivery services and technology providers.
6
Other factors could also adversely affect our advertising revenues and,
thus, impair our business, financial condition and operating results. For
example, widespread use of "filter" software programs that limit access to our
storefronts and other hosted solutions from the Internet user's browser could
deter companies from advertising on the Internet. Additionally, no standards
have been widely accepted to measure the effectiveness of Internet advertising.
If such standards do not develop, companies may not continue their current
levels of Internet advertising, or if they are not currently advertising on the
Internet, they may be reluctant to do so.
For some of our customers, we provide extended payment terms over the
length of the contract, rather than collecting the entire payment up front. To
the extent that these amounts are not collected, our advertising revenues, bad
debt expense and cash flows may be negatively impacted. We also have barter
arrangements where we provide banner advertisements, storefronts and newsletter
sponsorships to some of our customers in exchange for advertising on their Web
sites or in their publications. If our barter arrangements do not continue, our
advertising revenues may decline. For the nine months ended September 30, 2001,
approximately $6.3 million, or 6.2%, of our reported revenue, was generated by
barter advertising arrangements.
THE CONTENT ON OUR INDUSTRY MARKETPLACES MAY NOT ATTRACT A SIGNIFICANT NUMBER OF
USERS WITH DEMOGRAPHIC CHARACTERISTICS VALUABLE TO ADVERTISERS.
Our future success depends in part upon our ability to deliver
compelling business content on our industry marketplaces that will attract a
significant number of users with demographic characteristics valuable to
advertisers. Our inability to deliver business content that attracts a loyal
user base with demographic characteristics attractive to advertisers could
impair our business, financial condition and operating results. We face the
challenge of delivering content that is attractive to users in an environment
characterized by rapidly changing user preferences, as well as the ease with
which users can freely navigate and instantly switch among a large number of Web
sites, many of which offer content that may be more attractive than ours. If we
cannot consistently anticipate or respond quickly to changes in user preferences
or distinguish our content from that offered on other Web sites, we may never
attract a significant number of users with demographic characteristics that
advertisers are seeking.
OUR FAILURE TO BUILD AND MAINTAIN RELATIONSHIPS WITH THIRD-PARTY CONTENT
PROVIDERS MAY IMPAIR OUR OPERATING RESULTS.
We have relied on, and expect to rely increasingly on, third parties
such as freelance authors, trade publications and news wires to provide content
for our industry marketplaces. It is critical to our business that we maintain
and build existing and new relationships with content providers. However, we may
not be able to do so, which could result in decreased traffic on our industry
marketplaces and decreased advertising revenues. Many of our agreements with
content providers are for initial terms of one to two years. Content providers
may choose not to renew the agreements or terminate the agreements early if we
do not fulfill our contractual obligations. Moreover, like our existing
agreements with some of our content providers, our new and renewal agreements
for third-party content may be non-exclusive, which means that competitors may
offer the same content we offer or similar content. Additionally, the terms of
any new or renewal agreements we enter into may be less favorable to us than our
existing agreements. In particular, as competition for content increases, the
licensing fees we pay to our content providers may correspondingly increase,
which would negatively impact our operating results.
IF WE DO NOT DEVELOP THE "VERTICALNET" BRAND AND OUR OTHER BRANDS, OUR REVENUES
COULD DECREASE.
To be successful, we must establish and strengthen the awareness of the
"Verticalnet" brand and our other brands. If our brand awareness is weakened, it
could decrease the attractiveness of our products and services to our suppliers,
buyers and users, which could result in decreased revenues. We believe that
brand recognition will become increasingly important in the future with
increasing competition between Internet sites and e-commerce solution providers.
If customers do not begin to associate secondary meaning with our brands, then
our ability to gain market share will be diminished, which could impair our
business, financial condition and operating results.
7
IF WE ARE UNABLE TO PROVIDE OUR SUPPLIERS, BUYERS AND USERS WITH NEW CUSTOMER
LEADS, OUR INDUSTRY MARKETPLACE STRATEGY WILL NOT SUCCEED.
To enable suppliers, buyers and users to obtain new customer leads
through our industry marketplaces, we currently are responsible for loading
suppliers' product information into our database and categorizing the
information for search purposes. This process entails a number of risks,
including dependence on our suppliers to provide us in a timely manner with
accurate, complete and current information about their products and to update
this information promptly when it changes. The actual loading of this product
information in our database may be delayed, depending upon a number of factors,
including the formatting of the data provided to us and our ability to further
automate and expand our operations to load the data accurately in our product
database.
We are generally obligated under our supplier agreements to load and
update product data into our database within a specified period of time
following its delivery. While we intend to further automate the loading and
updating of supplier data on our system, we may not be able to do so in a timely
manner, in part because achieving the highest level of this automation is
dependent upon our suppliers automating their delivery of product data to us. If
our suppliers do not provide us in a timely manner with accurate, complete and
current information about the products we offer, our database may not be useful
to our customers and users as a tool for new customer leads. Although we screen
our suppliers' information before we make it available to our customers and
users, we cannot guarantee that the product information available in our
database will always be accurate, complete and current, or comply with
governmental regulations. Any resulting exposure to liability or decreased
adoption and use of our industry marketplaces could reduce our revenues and
therefore have a negative effect on our business, results of operations and
financial condition.
WE MAY HAVE REDUCED STAFFING LEVELS TO LEVELS THAT ARE NOT ADEQUATE TO CONDUCT
OUR BUSINESS.
The number of our employees has declined significantly since December
31, 2000, primarily as a result of reductions in force instituted to reduce
operating expenses and to implement strategic changes in our business. Current
staffing levels may not be sufficient to adequately meet our business
requirements. We may incur additional expenses to hire consultants or increase
staffing levels in the future. Fluctuations in staffing levels and use of
consultants may have a negative effect on our business, results of operations
and financial condition.
RISK OF FAILURE OF OUR COMPUTER AND COMMUNICATIONS HARDWARE SYSTEMS.
The performance of our computer and communications hardware systems is
critical to our business and reputation, as well as our ability to provide high
quality customer service and attract and retain customers, suppliers, users and
strategic partners. Any system interruptions that cause our industry
marketplaces to be unavailable may reduce their attractiveness to users, buyers
and suppliers and could impair our business, financial condition and operating
results.
OUR INTERESTS MAY CONFLICT WITH THOSE OF INTERNET CAPITAL GROUP, OUR LARGEST
SHAREHOLDER, WHICH MAY AFFECT OUR BUSINESS STRATEGY AND OPERATIONS NEGATIVELY.
As a result of its stock ownership and board representation, Internet
Capital Group is in a position to affect our business strategy and operations,
including corporate actions such as mergers or takeover attempts, in a manner
that could conflict with the interests of our public shareholders. At November
1, 2001, Internet Capital Group beneficially owned 25,318,644 shares, or
approximately 25.5%, of our common stock, which includes 250,000 shares of our
common stock underlying $5.0 million of our 5 1/4% convertible subordinated
debt, and 478,624 shares of our common stock underlying warrants issued to
Internet Capital Group prior to our initial public offering. One representative
of Internet Capital Group is a member of our board of directors. We may compete
with Internet Capital Group for Internet-related opportunities as it seeks to
expand its number of business-to-business assets, in part through acquisitions
and investments. Internet Capital Group, therefore, may seek to acquire or
invest in companies that we would find attractive. While we may partner with
Internet Capital Group on future acquisitions or investments, we have no current
contractual obligations to do so. We do not have any contracts or other
understandings that would govern resolution of this potential conflict. This
competition, and the potential conflict
8
posed by the designated director, may deter companies from partnering with us
and may limit our business opportunities.
INTERNET CAPITAL GROUP MAY HAVE TO BUY OR SELL OUR STOCK TO AVOID REGISTRATION
UNDER THE INVESTMENT COMPANY ACT OF 1940, WHICH MAY NEGATIVELY AFFECT OUR STOCK
PRICE.
To avoid registration under the Investment Company Act of 1940,
Internet Capital Group may need to continue to own more than 25% of our voting
securities and to continue to have a representative on our board of directors.
Under the Investment Company Act, a company is considered to control another
company if it owns more than 25% of that company's voting securities and is the
largest stockholder of such company. A company may be required to register as an
investment company if more than 45% of its total assets consist of, and more
than 45% of its income/loss and revenue attributable to it over the last four
quarters is derived from, ownership interests in companies it does not control.
Internet Capital Group has publicly stated that it is not feasible to be
regulated as an investment company because the Investment Company Act rules are
inconsistent with their corporate strategy. As a result of our shares issued in
the merger with Atlas Commerce, Internet Capital Group's ownership interest in
us is expected to fall below 25%. If its ownership interest falls below 25%,
Internet Capital Group may need to purchase additional voting securities to
return to an ownership interest of at least 25% in order to avoid having to
register as an investment company. The possible need of Internet Capital Group
to maintain a 25% ownership position could adversely influence its decisions
regarding actions that may otherwise be in the best interests of our public
shareholders.
Additionally, significant changes in Internet Capital Group's ownership
of our common stock could adversely affect our common stock's market price. For
example, rather than purchase additional voting securities as described in the
preceding paragraph, Internet Capital Group may choose to liquidate its position
entirely to avoid having to register as an investment company. If Internet
Capital Group sells all or part of its investment in us, whether to comply with
the Investment Company Act of 1940, to raise additional capital or otherwise,
then the market price of our common stock could fall.
OUR SUCCESS DEPENDS ON OUR KEY PERSONNEL WHOM WE MAY NOT BE ABLE TO RETAIN, AND
WE MAY NOT BE ABLE TO HIRE ENOUGH ADDITIONAL PERSONNEL TO MEET OUR NEEDS.
We believe that our success depends on continued employment of our
senior management team. If one or more members of our senior management team
were unable or unwilling to continue in their present positions, our business,
financial condition and operating results could be materially adversely
affected.
Our success also depends on having a highly trained technical staff,
sales force and customer service organization. We will need to continue to hire
personnel with the skill sets necessary to operate our business as we refine our
business strategies and as our business grows. Competition for personnel,
particularly for employees with technical expertise, is intense. A shortage in
the number of trained technical personnel, salespeople and customer service
professionals could limit our ability to design, develop and implement our
products, increase sales of our existing products and services and make new
sales as we offer new products and services. Ultimately, our business, financial
condition and operating results will be impaired if we cannot hire and retain
suitable personnel.
OUR SUCCESS DEPENDS ON THE DEVELOPMENT OF THE E-COMMERCE MARKET, WHICH IS
UNCERTAIN.
Business-to-business e-commerce is a new and emerging business practice
that remains largely untested in the marketplace and depends on the increased
acceptance and use of the Internet as a medium of commerce. If e-commerce does
not grow or grows more slowly than expected, our business will suffer. Our
long-term success depends on widespread market acceptance of e-commerce.
A number of factors could prevent such acceptance, including the
following:
- buyers may be unwilling to shift their purchasing to online
solutions;
9
- the necessary network infrastructure for substantial growth in
usage of the Internet may not be adequately developed;
- buyers and suppliers may be unwilling to use online vendors due
to security and confidentiality concerns;
- increased government regulation or taxation may adversely affect
the viability of e-commerce;
- insufficient availability of, or changes in, telecommunication
services could result in slower response times or inconsistent
service quality;
- online transactions generally lack the human contact that offline
transactions offer; and
- lack of availability of cost-effective, high-speed Internet
service.
SECURITY RISKS AND CONCERNS MAY DETER THE USE OF THE INTERNET FOR CONDUCTING
E-COMMERCE.
The secure transmission of confidential information over the Internet
is essential to maintaining customer and supplier confidence. Concerns regarding
security of transactions and transmitting confidential information over the
Internet may negatively impact our business. We believe that concerns regarding
the security of confidential information transmitted over the Internet, such as
credit card numbers, prevent many potential customers from engaging in online
transactions. If we do not add sufficient security features to future product
releases, our products may not gain market acceptance or we may incur additional
legal exposure. We have included basic security features in some of our products
to protect the privacy and integrity of customer data, such as password
requirements for access to portions of our industry marketplaces. We currently
use authentication technology, which requires passwords and other information to
prevent unauthorized persons from accessing a supplier's information. We also
use encryption technology, which transforms information into a "code" designed
to be unreadable by third parties, to protect confidential information such as
credit card numbers in commerce transactions.
Despite the measures we have taken, our infrastructure is potentially
vulnerable to physical or electronic break-ins, viruses or similar problems. If
a person circumvents our security measures, he or she could misappropriate
proprietary information or cause interruptions in our operations. Security
breaches that result in access to confidential information could damage our
reputation and expose us to a risk of loss or liability. We may be required to
make significant investments and efforts to protect against or remedy security
breaches. Additionally, as e-commerce becomes more prevalent, our suppliers will
become more concerned about security. Our failure to address these concerns
adequately could impair our business, financial condition and operating results.
LIMITED INTERNET INFRASTRUCTURE MAY HARM OUR BUSINESS.
The significant growth of Internet traffic over a relatively short
period of time has caused frequent periods of decreased Internet performance,
delays and, in some cases, system outages. These problems are caused by
limitations inherent in the technology infrastructure supporting the Internet
and the internal networks of Internet users. If our existing or potential
suppliers and users experience frequent outages or delays on the Internet, our
business may grow more slowly than we expect or even decline. Our ability to
grow our business is limited by and depends upon the reliability of both the
Internet and the internal networks of our existing and potential suppliers,
buyers and users. If improvements in the infrastructure supporting both the
Internet and the internal networks of our users, buyers and suppliers are not
made timely, we may have difficulty obtaining new customers or maintaining our
existing ones, either of which could reduce our potential revenues and have a
negative impact on our business, results of operations and financial condition.
10
WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND MAY INFRINGE THE
PROPRIETARY RIGHTS OF OTHERS.
Proprietary rights are important to our success and our competitive
position. We may be unable to register, maintain and protect our proprietary
rights adequately or to prevent others from claiming violations of their
proprietary rights. As of November 1, 2001, we own and use 16 trademarks
registered with the United States Patent and Trademark Office ("PTO").
Additionally, we have 28 applications for registration of various trademarks
pending with the PTO. We have 10 state trademark registrations. Outside of the
United States, as of November 1, 2001, we own and use 6 trademarks registered
with various foreign patent and trademark offices. Likewise, as of November 1,
2001, we have 12 patent applications pending with the PTO and 6 international
applications pending. Additionally, we own 1485 tLD domain names and 124
ccTLD/gTLD domain names. Lastly, as of November 1, 2001, we have 56 copyrights
registered with the Library of Congress ("LOC") and 19 applications for
registration of various copyrights pending with the LOC.
Certain proprietary technology underlying our software is the subject
of pending patent applications. Our ability to fully protect this technology is
contingent upon the ultimate issuance of the corresponding patents. In addition,
effective patent, copyright and trade secret protection of our software may be
unavailable or limited in certain countries.
Generally, our domain names for our industry marketplaces cannot be
protected as trademarks because they are considered "generic" under applicable
law. In addition, effective copyright, trademark, patent and trade secret
protection may be unavailable or limited in certain countries, and the global
nature of the Internet makes it impossible to control the ultimate destination
of our work. We also license content from third parties, which makes it possible
that we could become subject to infringement actions based upon the content
licensed from those third parties. We generally obtain representations as to the
origin and ownership of such licensed content and indemnification from those
third parties; however, this may not adequately protect us. Any of these claims,
regardless of their merit, could subject us to costly litigation and divert the
attention of our technical and management personnel.
WE MAY BE SUBJECT TO LEGAL LIABILITY FOR PUBLISHING OR DISTRIBUTING CONTENT OVER
THE INTERNET.
Providers of Internet products and services have been sued in the past,
sometimes successfully, based on the content they offer. We may be subject to
legal claims relating to the content on our industry marketplaces, or the
downloading and distribution of such content. Claims could also involve matters
such as defamation, invasion of privacy and copyright infringement. In addition,
some of the content provided on our industry marketplaces is drawn from data
compiled by other parties, including governmental and commercial sources, and we
re-key the data. This data may have errors. If our content is improperly used or
if we supply incorrect information, it could result in unexpected liability. Our
insurance may not cover claims of this type, or may not provide sufficient
coverage. Our business, financial condition and operating results could suffer
materially if costs resulting from these claims are not covered by our insurance
or exceed our coverage.
SEVERAL LAWSUITS HAVE BEEN BROUGHT AGAINST US AND THE OUTCOME OF THESE LAWSUITS
IS UNCERTAIN.
Several lawsuits have been brought against us and the underwriters of
our initial public offering. These lawsuits allege, among other things, that the
underwriters engaged in sales practices that had the effect of inflating our
stock price, and that our prospectus for this offering was materially misleading
because it did not disclose these sales practices. We intend to vigorously
defend against these lawsuits. No assurance can be given as to the outcome of
these lawsuits.
WE ARE SUBJECT TO GOVERNMENT REGULATION THAT EXPOSES US TO POTENTIAL LIABILITY
AND NEGATIVE PUBLICITY.
It is also possible that a number of laws and regulations may be
adopted or interpreted in the United States and abroad with particular
applicability to the Internet. These laws and regulations may, for example,
cover issues
11
such as user privacy, freedom of expression, pricing, content and quality of
products and services, taxation, advertising, intellectual property rights,
access charges and information security. The enactment of such laws could have a
negative effect on our business, financial condition and operating results.
We post our privacy policy and practices concerning the use and
disclosure of user data on our industry marketplaces. Any failure by us to
comply with our posted privacy policy, Federal Trade Commission ("FTC")
requirements or other privacy-related laws and regulations could result in
proceedings by the FTC or others which could potentially have an adverse effect
on our business, results of operations and financial condition.
WE MAY NOT HAVE SUFFICIENT CASH FLOW FROM OPERATIONS TO SERVICE OUR DEBT.
As of September 30, 2001, we had approximately $22.4 million in
long-term debt (including $21.7 million of our outstanding 5 1/4% convertible
subordinated debentures due 2004). Currently, we are not generating sufficient
cash flow from our operations to satisfy our annual debt service payment
obligations. If we are unable to satisfy our debt service requirements,
substantial liquidity problems could result, which would negatively impact our
future prospects.
SHARES ELIGIBLE FOR FUTURE SALE BY OUR CURRENT OR FUTURE SHAREHOLDERS MAY CAUSE
OUR STOCK PRICE TO DECLINE.
If our shareholders or optionholders sell substantial amounts of our
common stock in the public market, including shares issued in connection with
completed or future acquisitions or upon the exercise of outstanding options and
warrants, then the market price of our common stock could fall.
As of November 1, 2001, the holders of up to approximately 27,353,408
shares of common stock, warrants to purchase 2,127,038 shares of common stock
and 107,675 shares of Series A preferred stock, which are convertible into
approximately 1,239,428 shares of common stock, have demand and/or piggyback
registration rights. Under the terms of the Series A preferred stock, we may
elect to pay the dividends payable thereunder by issuing shares of Series A
preferred stock or shares of common stock, rather than paying cash dividends. As
of September 30, 2001, cumulative dividends of $9.3 million had been earned by
the holder of our Series A preferred stock, of which $7.7 million were paid in
the form of additional shares of Series A preferred stock and the remainder of
which are accrued and remain payable. The shares of common stock underlying any
dividended shares of Series A preferred stock and any dividended shares of
common stock are also subject to demand and piggyback registration rights. The
exercise of such rights could adversely affect the market price of our common
stock.
We have filed a shelf registration statement to facilitate our
acquisition strategy, as well as registration statements to register shares of
common stock under our stock option and employee stock purchase plans. Shares
issued pursuant to existing or future shelf registration statements, upon
exercise of stock options and in connection with our employee stock purchase
plan will be eligible for resale in the public market without restriction.
ANTI-TAKEOVER PROVISIONS AND OUR RIGHT TO ISSUE PREFERRED STOCK COULD MAKE A
THIRD-PARTY ACQUISITION OF US DIFFICULT.
Verticalnet is a Pennsylvania corporation. Anti-takeover provisions of
Pennsylvania law could make it more difficult for a third party to acquire
control of us, even if such change in control would be beneficial to our
shareholders. Our articles of incorporation provide that our board of directors
may issue preferred stock without shareholder approval. In addition, our bylaws
provide for a classified board, with each board member serving a staggered
three-year term. The issuance of preferred stock and the existence of a
classified board could make it more difficult for a third party to acquire us.
OUR COMMON STOCK PRICE IS LIKELY TO REMAIN HIGHLY VOLATILE.
The stock market in general, and the market for stocks of
Internet-related and technology companies in particular, have been highly
volatile. The market price of our common stock and our daily trading volume have
been, and will likely continue to be, similarly volatile. Investors may not be
able to resell their shares of our common stock following periods of volatility
because of the market's adverse reaction to such volatility. The trading
12
prices of many technology and Internet-related companies' stocks reached
historical highs in early 2000 and reflected relative valuations substantially
above historical levels. Since that time, many of these companies' stocks have
also recorded lows well below their historical highs. Our stock may not trade at
the same levels as other Internet-related or technology stocks.
Factors that could cause such volatility may include, among other
things:
- general economic conditions, including suppressed demand for
technology and related services;
- actual or anticipated variations in quarterly operating results;
- announcements of technological innovations;
- new products or services;
- changes in financial estimates by securities analysts;
- conditions or trends in business-to-business usage of the
Internet or the software and related services industry;
- changes in the market valuations of other Internet, software or
technology companies;
- failure to meet analysts' or investors' expectations;
- announcements by us or our competitors of significant
acquisitions, strategic partnerships or joint ventures;
- capital commitments;
- additions or departures of key personnel; and
- sales of common stock or instruments convertible into common
stock.
Many of these factors are beyond our control. These factors may cause
the market price of our common stock to fall, regardless of our operating
performance.
WE ARE EXPOSED TO RISKS ASSOCIATED WITH INTEREST RATE CHANGES AND CHANGES IN THE
MARKET VALUE OF OUR INVESTMENTS.
Our exposure to market risk related changes in interest rates relates
primarily to our investment portfolio. We invest in instruments that meet high
quality credit standards, as specified in our investment policy. The policy also
limits the amount of credit exposure we may have to any one issue, issuer or
type of investment. As of September 30, 2001, our portfolio of investments
included $52.6 million in cash and cash equivalents. Due to the conservative
nature of our investment portfolio, we believe that a sudden change in interest
rates would not have a material effect on the value of the portfolio. We
estimate that if the average yield of our investments had decreased by 100 basis
points, our interest income for the nine months ended September 30, 2001 would
have decreased by less than $0.4 million. This estimate assumes that the
decrease occurred on the first day of the year and reduced the yield of each
investment instrument by 100 basis points. The impact on our future interest
income and future changes in investment yields will depend largely on the gross
amount of our investment portfolio.
We invest in equity instruments of privately-held companies for
business and strategic purposes. These investments are included in other
investments and are accounted for under the cost method when ownership is less
than 20% and we do not have the ability to exercise significant influence over
operations. As of September 30, 2001 we hold cost method investments of
approximately $23.6 million, of which our Converge investment is $19.6 million.
For these investments in privately-held companies, our policy is to regularly
review the assumptions
13
underlying the operating performance and cash flow forecasts in assessing the
recoverability of the carrying values. We identify and record impairment losses
on long-lived assets when events and circumstances indicate that such assets
might be impaired. During the nine months ended September 30, 2001, we recorded
$206.2 million of impairment charges for other than temporary declines in the
fair value of several of our cost method investments. Approximately $195.4
million of the impairment charge was related to a third quarter write-down of
our Converge investment. Since our initial investment, certain of these
investments in privately-held companies have become marketable equity securities
upon the investees' completion of initial public offerings or the acquisition of
the investee by a public company. Such investments, most of which are in the
Internet industry, are subject to significant fluctuations in fair market value
due to the volatility of the stock market. As of September 30, 2001, the fair
market value of these investments included in short-term and long-term
investments was $1.1 million.
In connection with Ariba's acquisition of Tradex Technologies, Inc., we
received Ariba common stock. In July 2000, we entered into forward sale
contracts relating to our investment in Ariba. Under these contracts, we pledged
our shares of Ariba's common stock to the counterparty for a three-year period
in return for approximately $47.4 million of cash. At the conclusion of the
three-year period, we have the option of delivering either cash or the pledged
Ariba shares to satisfy the forward sale. However, we will not be required to
deliver shares in excess of those we pledged. If we choose to deliver Ariba
shares to satisfy the forward sale, the number of Ariba shares to be delivered
at maturity may vary depending on the then market price of Ariba's common stock.
We have only limited involvement with derivative financial instruments and do
not use them for trading purposes. Our risk of loss in the event of
nonperformance by the counterparty under the forward sales contract is not
considered to be significant. Although the forward sales contract exposes us to
market risk, fluctuations in the fair value of these contracts are mitigated by
expected offsetting fluctuations in the value of the pledged securities.
FORWARD-LOOKING STATEMENTS
Our disclosure and analysis in this prospectus contain some forward-looking
statements. Forward-looking statements give our current expectations or
forecasts of future events. You can identify these statements by the fact that
they do not relate strictly to historical or current facts. Such statements may
include words such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe" and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance.
Any or all of our forward-looking statements in this prospectus may turn
out to be wrong. They can be affected by inaccurate assumptions we might make or
by known or unknown risks and uncertainties. Many factors mentioned in our
discussion in this prospectus will be important in determining future results.
Consequently, no forward-looking statement can be guaranteed. Actual future
results may vary materially.
We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we make in our
reports to the SEC on Forms 10-K, 10-Q and 8-K. Also note that we provide a
cautionary discussion of risks and uncertainties under "Risk Factors" on page 1
of this prospectus. These are factors that we think could cause our actual
results to differ materially from expected results. Other factors besides those
listed here could also adversely affect us. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of 1995.
USE OF PROCEEDS
We will not receive any proceeds from the resale of the common stock
offered through this prospectus.
SELLING SHAREHOLDERS
The shares of common stock were issued by Verticalnet in connection with
the acquisition of Atlas Commerce, Inc. Such transaction was exempt from the
registration requirements of the Securities Act. Verticalnet has agreed with
each selling shareholder to file the registration statement to register for
resale the shares of common stock set forth below. None of the selling
shareholders has had a material relationship with Verticalnet within the past
three years other than as a result of the ownership of our shares or other
securities.
14
The following table sets forth information, as of December 28, 2001, with
respect to each selling shareholder. The information below is based on
information provided by or on behalf of the selling shareholders. The selling
shareholders may offer all, some or none of the common stock. Because the
selling shareholders may offer all or some portion of the common stock, no
estimate can be given as to the amount of the common stock that will be held by
the selling shareholders upon completion of this offering. In addition, the
selling shareholders identified below may have sold, transferred or otherwise
disposed of all or a portion of their common stock since the date on which they
provided the information regarding their common stock.
SHARES BENEFICIALLY OWNED
NAME BEFORE OFFERING SHARES OFFERED HEREBY
---- --------------- ---------------------
Arzoon.com, Inc 11,114 11,114
J.D. Edwards & Co. 111,149 111,149
UniStar, LLC 36,968 36,968
Churchill Downs Investment Corp. 23,525 23,525
National Thoroughbred Racing Association 6,721 6,721
Hammer and Company 2,222 2,222
Internet Investment Partnership 117,818 117,818
Adam L. Lemoine LLC 2,222 2,222
Perch Bay I, LLC 88,919 88,919
Progress Capital, Inc. 1,995 1,995
Safeguard 2000 Capital L.P. 9,359,409 9,359,409
Safeguard 2001 Capital L.P. 1,163,694 1,163,694
Alford, Edgar L. 3,334 3,334
Alvarez, Lynne A. 444 444
Balestri, Ray and Heather 2,222 2,222
Barr, Jack 22,229 22,229
Bartlett, John 13,337 13,337
Baumann, Michael 145,883 145,883
Bolling, Robert 3,175 3,175
Bossidy, Lawrence 88,919 88,919
Boumendil, Claude 2,222 2,222
Bucheleres, John 5,557 5,557
Mark Byrd Irrevocable Deed of Trust 5,080 5,080
Mark Byrd Friends & Family Trust 15,242 15,242
Byrd, Mark 600,209 600,209
Jennifer Byrd Irrevocable Deed of Trust 5,080 5,080
Byrd, Jennifer Marie 85,743 85,743
Byrd, Timothy 33,344 33,344
Cannon, James 3,810 3,810
Casper, Kenneth 1,270 1,270
Chretien, Francois 4,445 4,445
Demas, Theodore 5,557 5,557
Dev, Vishva 3,334 3,334
Dildy, Gary 2,222 2,222
DiLeonardo, Frank 3,175 3,175
Dupuis, Alain 12,350 12,350
Fesnak, Robert 3,334 3,334
Gabriele, Franklin 9,527 9,527
Gaeto, Mark 2,222 2,222
Hanger, John 39,791 39,791
Hanger Family Irrevocable Trust 4,668 4,668
Hecox, James 5,779 5,779
15
Holland, Joseph 711,357 711,357
Holland, Lilianne 25,564 25,564
Landry, Blake 1,111 1,111
Landry, Mark 53,351 53,351
Landry, Scott 1,111 1,111
Laux, Douglas 6,351 6,351
Mangiardi, Eric 3,704 3,704
Mitts, Lester 4,445 4,445
Morice, Jack 2,222 2,222
Neuchterlein, Jeffrey 12,702 12,702
O'Connell, Gerald 88,919 88,919
Paolino, Salvatore 69 69
Papanicolauo, Michael 3,334 3,334
Pastore, John 8,891 8,891
Pelisson, Gilles 12,350 12,350
Phelan, David 88,919 88,919
Poulin, Jeffrey 2,469 2,469
Prescott, Bruce 7,780 7,780
Rabinowitz, Michael 592 592
Reester, Jeffrey K. and Joan M. (JTWROS) 6,668 6,668
Reester, Kevin 177,839 177,839
Robbins, Christopher 800 800
Seliga, John 27 27
Siegfried, Steve 31,788 31,788
Smart, James 3,334 3,334
Swanson, Tim 16,672 16,672
The Tiernan Family Trust 22,229 22,229
The Tiernan's Children's Trust 5,080 5,080
Tiernan, Daniel 598,302 598,302
Tiernan, Amy 85,743 85,743
Von Novak, Thomas 51,962 51,962
Wallaesa, Harry 31,788 31,788
Welsh, Cathy 666 666
Winandy, P. and Lacy, M. 22,229 22,229
Zimmerman, Lee 8,002 8,002
---------- ----------
Total 14,157,630 14,157,630
========== ==========
PLAN OF DISTRIBUTION
The selling shareholders and their successors, which term includes their
transferees, pledgees or donees or their successors, may sell the common stock
directly to purchasers or through underwriters, broker-dealers or agents, who
may receive compensation in the form of discounts, concessions or commissions
from the selling shareholders or the purchasers, which discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
The common stock may be sold in one or more transactions at fixed prices,
at prevailing market prices at the time of sale, at prices related to such
prevailing market prices, at varying prices determined at the time of sale, or
at negotiated prices. The common stock may be sold by one or more of, or a
combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
16
- an exchange distribution in accordance with the rules of such
exchange;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- in privately negotiated transactions.
In connection with the sale of the common stock, the selling shareholders
may enter into hedging transactions with broker-dealers or other financial
institutions which may in turn engage in short sales of the common stock and
deliver these securities to close out such short positions, or loan or pledge
the common stock to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling shareholders from the sale of the
common stock offered by them hereby will be the purchase price of such common
stock less discounts and commissions, if any. Each of the selling shareholders
reserves the right to accept and, together with their agents from time to time,
to reject, in whole or in part, any proposed purchase of common stock to be made
directly or through agents. We will not receive any of the proceeds from this
offering.
Our common stock is listed for trading on the Nasdaq National Market. We
intend to list the common stock offered through this prospectus for trading on
the Nasdaq National Market.
In order to comply with the securities laws of some states, if applicable,
the common stock may be sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states the common stock may
not be sold unless it has been registered or qualified for sale or an exemption
from registration or qualification requirements is available and is complied
with.
The selling shareholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock, may be "underwriters" within
the meaning of Section 2(11) of the Securities Act of 1933. Any discounts,
commissions, concessions or profit they earn on any resale of the shares may be
underwriting discounts and commissions under the Securities Act of 1933. Selling
shareholders who are "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933 will be subject to the prospectus delivery requirements
of the Securities Act of 1933. The selling shareholders have acknowledged that
they understand their obligations to comply with the provisions of the
Securities Exchange Act of 1934 and the rules thereunder relating to stock
manipulation, particularly Regulation M, and have agreed that they will not
engage in any transaction in violation of such provisions.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus. A selling shareholder may not sell any
common stock described herein and may not transfer, devise or gift such
securities by other means not described in this prospectus.
To the extent required, the specific common stock to be sold, the names of
the selling shareholders, the respective purchase prices and public offering
prices, the names of any agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed
upon for us by our general counsel, James W. McKenzie, Jr.
EXPERTS
The consolidated financial statements and schedule of Verticalnet, Inc. as
of December 31, 2000 and 1999, and for each of the years in the three-year
period ended December 31, 2000, have been incorporated by reference herein
17
and in the registration statement in reliance upon the report of KPMG LLP,
independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
ABOUT THIS PROSPECTUS
No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by
Verticalnet, Inc., any selling shareholder or by any other person. Neither the
delivery of this prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information herein is correct as of
any time subsequent to the date hereof. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any security other than the
securities covered by this prospectus, nor does it constitute an offer to or
solicitation of any person in any jurisdiction in which such offer or
solicitation may not lawfully be made.
WHERE YOU CAN FIND MORE INFORMATION
The SEC permits us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file with the
Commission after the date of this prospectus will automatically update and
supersede this information. However, any information contained herein shall
modify or supersede information contained in documents we filed with the
Commission before the date of this prospectus.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the offering is completed.
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, filed with the Commission on April 2, 2001.
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001, filed with the Commission on May 14, 2001.
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2001, filed with the Commission on August 13, 2001.
(d) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001, filed with the Commission on November 14, 2001.
(e) The Company's Current Reports on Form 8-K, as amended, filed with
the Commission since December 31, 2000.
(f) The description of the Common Stock of the Company contained in a
registration statement filed on Form 8-A under the Securities
Exchange Act of 1934 filed on January 19, 1999, including any
amendment or report filed for the purpose of updating such
description.
If you request a copy of any or all of the documents incorporated by
reference by written or oral request, then we will send to you the copies you
requested at no charge. However, we will not send exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents. You should direct requests for such copies to Verticalnet, Inc., 700
Dresher Road, Horsham, Pennsylvania 19044, Attention: James W. McKenzie, Jr.,
(215) 315-3592.
In addition, we file reports, proxy statements and other information with
the SEC under the Securities Exchange Act of 1934. You may read and copy this
information at the following locations of the Commission: (1) Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and (2) Midwest Regional Office, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
18
You may also obtain copies of this information by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Further information on the operation of the
Commission's Public Reference Room in Washington, D.C. can be obtained by
calling the Commission at 1-800-SEC-0330.
Our common stock is quoted on The Nasdaq National Market. Reports, proxy
statements and other information concerning Verticalnet can be inspected at the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. The Commission maintains a Web site that contains all
information filed electronically by us. The address of the Commission's Web site
is http://www.sec.gov.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT
IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, THESE SECURITIES IN ANY STATE
IN WHICH THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS
IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER
THAT DATE.
VERTICALNET, INC.
14,157,630 SHARES
OF COMMON STOCK
PROSPECTUS
January __, 2002
19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses of the issuance and
distribution of the securities offered hereby, all of which will be paid by
Verticalnet, Inc.
Registration fee ..................................... $ 4,889.41
Printing fees ........................................ 5,000.00
Legal fees ........................................... 7,000.00
Accounting fees ...................................... 15,000.00
Miscellaneous ........................................ 10,000.00
----------
Total ................................................ $41,889.41
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Amended and Restated Articles of Incorporation provide that
pursuant to and to the extent permitted by Pennsylvania law, the Company's
directors shall not be personally liable for monetary damages for breach of any
duty owed to the Company and its shareholders. This provision does not eliminate
the duty of care, and, in appropriate circumstances, equitable remedies such as
an injunction or other forms of non-monetary relief would remain available under
Pennsylvania law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company, for acts
or omissions not in good faith or involving knowing violations of law, or for
actions resulting in improper personal benefit to the director, the provision
also does not affect a director's responsibilities under any other law, such as
federal securities laws or state or federal environmental laws. The Company's
Amended and Restated Bylaws provide that the Company shall indemnify its
officers and directors to the fullest extent permitted by Pennsylvania law,
including some instances in which indemnification is otherwise discretionary
under Pennsylvania law. Pennsylvania law permits the Company to provide similar
indemnification to employees and agents who are not directors or officers. The
determination of whether an individual meets the applicable standard of conduct
may be made by the disinterested directors, independent legal counsel or the
shareholders. Pennsylvania law also permits indemnification in connection with a
proceeding brought by or in the right of the Company to procure a judgment in
its favor. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in that Act and is therefore unenforceable.
In general, any officer or director of the Company shall be indemnified by
the Company against expenses including attorneys' fees, judgments, fines and
settlements actually and reasonably incurred by that person in connection with a
legal proceeding as a result of such relationship, whether or not the
indemnified liability arises from an action by or in the right of the Company,
if the officer or director acted in good faith, and in the manner believed to be
in or not opposed to the Company's best interest, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the conduct
was unlawful. Such indemnity is limited to the extent that (i) such person is
not otherwise indemnified and (ii) such indemnifications not prohibited by
Pennsylvania law or any other applicable law.
Any indemnification under the previous paragraph (unless ordered by a
court) shall be made by the Company only as authorized in the specific case upon
the determination that indemnification of the director or officer is proper in
the circumstances because that person has met the applicable standard of conduct
set forth above. Such determination shall be made (i) by the Board of Directors
by a majority vote of a quorum of disinterested directors who are not parties to
such action or (ii) if such quorum is not obtainable or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion. To the extent that a director or officer of the Company shall
be successful in prosecuting an indemnity claim, the reasonable expenses of any
such person and the fees and expenses of any special legal counsel engaged to
determine the possibility of indemnification shall be borne by the Company.
20
Expenses incurred by a director or officer of the Company in defending a
civil or criminal action, suit or proceeding shall be paid by the Company in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that person is not entitled to be
indemnified by the Company as authorized by our Bylaws.
The indemnification and advancement of expenses provided by, or granted
pursuant to Article 8 of our Bylaws is not deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled, both as to action in that person's official capacity and as to action
in another capacity while holding such office.
The Board of Directors has the power to authorize the Company to purchase
and maintain insurance on behalf of the Company and others to the extent that
power to do so has not been prohibited by the Pennsylvania law, create any fund
to secure any of its indemnification obligations and give other indemnification
to the extent permitted by law. The obligations of the Company to indemnify a
director or officer under Article 8 of our Bylaws is a contract between the
Company and such director or officer and no modification or repeal of our Bylaws
shall detrimentally affect such officer or director with regard to that person's
acts or omissions prior to such amendment or repeal.
The Company has also purchased insurance for its directors and officers
for certain losses arising from claims or charges made against them in their
capacities as directors and officers of the Company.
ITEM 16. EXHIBITS.
(a) The following exhibits filed as part of this registration statement
are as follows:
EXHIBITS
Exhibit Number Description
-------------- -----------
4.1(1) Registration and Lock-Up Agreement dated
December 28, 2001 between Verticalnet, Inc.
and the shareholders of Atlas Commerce, Inc.
5.1 Opinion of James W. McKenzie, Jr., Esq.
regarding the legality of the securities
being registered
23.1 Consent of KPMG LLP
23.2 Consent of James W. McKenzie, Jr., Esq.
(included in his opinion filed as Exhibit
5.1 hereto)
24.1 Power of Attorney (included on signature
page to this Registration Statement)
(1) Filed as an exhibit to the Registrant's report on Form 8-K filed January
4, 2002.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which any offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment hereof) which, individually or in aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no
21
more than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any other material change to such information in the registration
statement.
(2) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities being offered therein and the
offering of such securities at the time may 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 which are being registered which remain unsold at the
termination of the offering.
(4) That for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) 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 at that time shall be deemed to be the initial bona fide offering
thereof.
(5) 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
by the Securities Act of 1933 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 of 1933 and will be governed by the final adjudication of such
issue.
22
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS 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 HORSHAM, PENNSYLVANIA AS OF JANUARY 4, 2002.
VERTICALNET, INC.
By: /s/ Michael J. Hagan
-----------------------------------------
Michael J. Hagan
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH INDIVIDUAL WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS MICHAEL J. HAGAN AND JAMES W. MCKENZIE, JR., OR
EITHER OF THEM, HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT WITH FULL POWER
OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN ANY AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE
AMENDMENTS) TO THIS REGISTRATION STATEMENT, AND TO FILE THE SAME WITH ALL
EXHIBITS THERETO, AND ALL DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES
AND EXCHANGE COMMISSION, GRANTING SAID ATTORNEY-IN-FACT AND AGENT, AND EACH OF
THEM, FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING
REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE PREMESIS, AS FULLY TO ALL
INTENTS AND PURPOSES AS HE OR SHE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING
AND CONFIRMING ALL THAT SAID ATTORNEY-IN-FACT AND AGENT OR ANY OF THEM, OR THEIR
OR HIS SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
Signature Title Date
--------- ----- ----
/s/ Mark L. Walsh Chairman of the Board and Director January 4, 2002
----------------------------
Mark L. Walsh
/s/ Michael J. Hagan President, Chief Executive Officer January 4, 2002
---------------------------- and Director (principal executive
Michael J. Hagan officer)
/s/ David Kostman Chief Operating Officer and Chief January 4, 2002
---------------------------- Financial Officer (principal financial
David Kostman officer and accounting officer)
/s/ Jeffrey C. Ballowe Director January 4, 2002
----------------------------
Jeffrey C. Ballowe
/s/ Walter W. Buckley, III Director January 4, 2002
----------------------------
Walter W. Buckley, III
23
/s/ Howard D. Ross Director January 4, 2002
----------------------------
Howard D. Ross
/s/ Robert F. Bernstock Director January 4, 2002
----------------------------
Robert F. Bernstock
/s/ Kevin McKay Director January 4, 2002
----------------------------
Kevin McKay
Director
----------------------------
Satya Nadella
24